<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the Fiscal Year Ended December 31, 1995
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
----- SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _______________ to _______________
Commission File Number 0-8467
------
WESBANCO, INC.
--------------
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
WEST VIRGINIA 55-0571723
------------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1 Bank Plaza, Wheeling, WV 26003
-------------------------- -----
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: 304-234-9000
------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
<TABLE>
<CAPTION>
Title of each class Name of each Exchange on which registered
- --------------------------- ------------------------------------------
<S> <C>
Common Stock $2.0833 Par Value National Association of Securities Dealers, Inc.
Nonredeemable Preferred Stock None
</TABLE>
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. _____
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
------- -------
The aggregate market value of voting stock computed using the average of the
bid and ask prices held by non-affiliates of the Registrant on February 29,
1996 was approximately $208,227,347.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
As of February 29, 1996, there were 8,475,572 shares of WesBanco, Inc. Common
Stock $2.0833 par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of WesBanco, Inc.'s 1995 Annual Report to Shareholders -
Parts II and III
Portions of the Registrant's definitive proxy statement to be filed pursuant
to Regulation 14A not later than 120 days after the end of the fiscal year
(December 31, 1995) are incorporated by reference in Part III.
Page 1 of 99
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WESBANCO, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM # ITEM PAGE(S)
- ------ ---- -------
<S> <C> <C>
Part I
------
1 Business 3-16
2 Properties 16
3 Legal proceedings 17
4 Submission of matters to a vote of security holders N/A
Part II
-------
5 Market for the registrant's common equity and related
stockholder matters (A)18
6 Selected financial data (A)
7 Management's discussion and analysis of financial
condition and results of operations (A)
8 Financial statements and supplementary data (A)
9 Changes in and disagreements with accountants on
accounting and financial disclosure N/A
Part III
--------
10 Directors and Executive Officers of the registrant (B) 18
11 Executive compensation (B)
12 Security ownership of certain beneficial owners and
management (B)
13 Certain relationships and related transactions (A) (B)
Part IV
-------
14 Exhibits, financial statement schedule and reports
on Form 8-K 19-20
(A) Pages 33-49, 61 of WesBanco, Inc.'s 1995 Annual Report
to Stockholders are incorporated herein by reference.
(B) Incorporated by reference to WesBanco, Inc.'s Proxy
Statement dated March 15, 1996, for Annual Meeting
of Stockholders to be held April 17, 1996.
</TABLE>
This Form contains a total of 99 pages.
2
<PAGE> 3
PART I
Item 1. Business
- -----------------
General
- -------
As of December 31, 1995, the Corporation had five banking affiliates
located in Wheeling, Charleston, Parkersburg, Kingwood, and Fairmont, West
Virginia. The Registrant had one banking affiliate in Barnesville, Ohio.
WesBanco Wheeling has twelve offices, all in West Virginia, five located in
Wheeling, two located in Follansbee, three in New Martinsville, one in
Sistersville, and one in Wellsburg. WesBanco Kingwood has two full-service
branch offices located in Masontown and Bruceton Mills. WesBanco Barnesville
has five offices, two located in Barnesville and one each in Bethesda,
Woodsfield and Beallsville, Ohio. WesBanco Fairmont has four offices located
in Fairmont, two offices located in Morgantown, three offices located in
Bridgeport, two in Shinnston and one in Nutter Fort, West Virginia. There are
approximately 755 full time equivalent employees employed by all affiliates
as of December 31, 1995.
WesBanco, Inc., through its subsidiaries, conducts a general banking,
commercial and trust business. Its full service banks offer a wide range of
services to commercial, consumer and government bodies, including but not
limited to, retail banking services, such as demand, savings and time deposits;
commercial, mortgage, and consumer installment loans; credit card services
through VISA and MasterCard; personal and corporate trust services; discount
brokerage services; and travel services. Most affiliates are participating
in local partnerships which operate banking machines in those local regions
primarily under the name of MAC. The banking machines are linked to CIRRUS,
a nationwide banking network.
The Corporation has reported to its shareholders that it may engage in
other activities of a finanical nature authorized by the Federal Reserve Board
through a subsidiary, or through acquisition of established companies.
As of December 31, 1995, none of the affiliates were engaged in any
operation in foreign countries and none has had transactions with customers
in foreign countries.
Competition
- -----------
Each affiliate bank faces strong competition for local business in their
respective market areas. Competition exists for new deposits, in the scope
and types of services offered, and the interest rates paid on time deposits
and charged on loans, and in other aspects of banking. The affiliate banks
encounter substantial competition not only from other commercial banks but
also from other financial institutions. Savings banks, savings and loan
associations, brokerage business and credit unions actively compete for
deposits. Such institutions, as well as consumer finance companies,
insurance companies and other enterprises, are important competitors for
various types of lending business. In addition, personal and corporate trust
services and investment counseling services are offered by insurance companies,
investment counseling firms and other business firms and individuals.
3
<PAGE> 4
Item 1. Business (continued)
- -----------------------------
Supervision and Regulation
- --------------------------
As a registered bank holding company, WesBanco is subject to the
supervision of the Federal Reserve Board and is required to file with the
Federal Reserve Board reports and other information regarding its business
operations and the business operations of its subsidiaries. WesBanco is also
subject to examination by the Federal Reserve Board and is required to obtain
Federal Reserve Board approval prior to acquiring, directly or indirectly,
ownership or control of voting shares of any bank, if, after such acquisition,
it would own or control more than 5% of the voting stock of such bank. In
addition, pursuant to federal law and regulations promulgated by the Federal
Reserve Board, WesBanco may only engage in, or own or control companies that
engage in, activities deemed by the Federal Reserve Board to be so closely
related to banking as to be a proper incident thereto. Prior to engaging in
most new business activities, WesBanco must obtain approval from the Federal
Reserve Board.
WesBanco's banking subsidiaries have deposits insured by the Bank
Insurance Fund ("BIF") of the Federal Deposit Insurance Corporation (the
"FDIC"), and are subject to supervision, examination, and regulation by state
banking authorities and either the FDIC or the Federal Reserve Board. In
addition to the impact of federal and state supervision and regulation, the
banking subsidiaries of WesBanco are affected significantly by the actions of
the Federal Reserve Board as it attempts to control the money supply and
credit availability in order to influence the economy.
WesBanco's depository institution subsidiaries are subject to affiliate
transaction restrictions under federal law which limit the transfer of funds
by the subsidiary banks to their parent and any nonbanking subsidiaries,
whether in the form of loans, extensions of credit, investments or asset
purchases. Such transfers by any subsidiary bank to its parent corporation
or to any nonbanking subsidiary are limited in amount to 10% of the
institution's capital and surplus and, with respect to such parent and all
such nonbanking subsidiaries, to an aggregate 20% of any such institution's
capital and surplus. Furthermore, such loans and extensions of credit are
required to be secured in specified amounts.
The Federal Reserve Board has a policy to the effect that a bank holding
company is expected to act as a source of financial and managerial strength to
each of its subsidiary banks and to commit resources to support each such
subsidiary bank. Under the source of strength doctrine, the Federal Reserve
Board may require a bank holding company to make capital injections into a
troubled subsidiary bank, and may charge the bank holding company with engaging
in unsafe and unsound practices for failure to commit resources to such a
subsidiary bank. This capital injection may be required at times when WesBanco
may not have the resources to provide it. Any capital loans by a holding
company to any of the subsidiary banks are subordinate in right of payment to
deposits and to certain other indebtedness of such subsidiary bank. Moreover,
in the event of a bank holding company's bankruptcy, any commitment by such
holding company to a federal bank regulatory agency to maintain the capital
of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to
a priority of payment.
4
<PAGE> 5
Item 1. Business (continued)
- -----------------------------
In 1989, the United States Congress passed comprehensive financial
institutions legislation known as the Financial Institution Reform, Recovery,
and Enforcement Act ("FIRREA"). FIRREA established a new principal of
liability on the part of depository institutions insured by the FDIC for any
losses incurred by, or reasonably expected to be incurred by, the FDIC after
August 9, 1989, in connection with (i) the default of a commonly controlled
FDIC-insured depository institution, or (ii) any assistance provided by the
FDIC to a commonly controled FDIC-insured depository institution in danger of
default. "Default" is defined generally as the appointment of a conservator
or receiver and "in danger of default" is defined generally as the existence
of certain conditions indicating that a "default" is likely to occur in the
absence of regulatory assistance. Accordingly, in the event that any insured
bank subsidiary of WesBanco causes a loss to the FDIC, other bank subsidiaries
of WesBanco could be required to compensate the FDIC by reimbursing to it the
amount of such loss.
Federal law permits the OCC to order the pro rata assessment of
shareholders of a national bank whose capital stock has become impaired,
by losses or otherwise to relieve a deficiency in such national bank's
capital stock. This statute also provides for the enforcement of any such
pro rata assessment of shareholders of such national bank to cover such
impairment of capital stock by sale, to the extent necessary, of the capital
stock of any assessed shareholder failing to pay the assessment. Similarly,
the laws of certain states provide for such assessment and sale with respect
to the subsidiary banks chartered by such states. WesBanco, as the sole
shareholder of its subsidiary banks, is subject to such provisions.
Dividend Restrictions
- ---------------------
There are statutory limits on the amount of dividends WesBanco's
depository institution subsidiaires can pay to their parent corporation
without regulatory approval. Under applicable federal regulations,
appropriate bank regulatory agency approval is required if the total of all
dividends declared by a bank in any calendar year exceeds the available
retained earnings and exceeds the aggregate of the bank's net profits (as
defined by regulatory agencies) for that year and its retained net profits
for the preceding two years, less any required transfers to surplus or a fund
for the retirement of any preferred stock.
FDIC Insurance
- --------------
The FDIC has the authority to raise the insurance premiums for
institutions in the BIF to a level necessary to achieve a target reserve
level of 1.25% of insured deposits within not more than 15 years. In
addition, the FDIC has the authority to impose special assessments in certain
circumstances. The level of deposit premiums affects the profitability of
subsidiary banks and thus the potential flow of dividends to parent companies.
Under the risk-based insurance assessment system that became effective
January 1, 1994, the FDIC places each insured depository institution in one of
nine risk categories based on its level of capital and other relevant
information (such as supervisory evaluations). The assessment rates under
the new system range from 0% to 0.27% depending upon the assessment category
into which the insured institution is placed. As of January 1, 1996, all
WesBanco banks will pay the statutory annual minimum of $2,000.
5
<PAGE> 6
Item 1. Business (continued)
- -----------------------------
Federal Deposit Insurance Corporation Improvement Act of 1991
- -------------------------------------------------------------
In December 1991, Congress enacted the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), which substantially revised
the bank regulatory and funding provisions of the Federal Deposit Insurance
Act and makes revisions to several other federal banking statutes.
Among other things, FDICIA requires federal bank regulatory authorities
to take "prompt corrective action" with respect to depository institutions
that do not meet minimum capital requirements. For these purposes, FDICIA
establishes five capital tiers: well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized.
Rules adopted by the Federal banking agencies under FDICIA provide that
an institution is deemed to be: "well capitalized" if the institution has a
Total (Tier 1 plus Tier II) risk-based capital ratio of 10.0% or greater, a
Tier I risk-based ratio of 6.0% or greater, and a leverage ratio of 5.0% or
greater, and the institution is not subject to an order, written agreement,
capital directive, or prompt corrective action directive to meet and maintain
a specific level for any capital measure; "adequately capitalized" if the
institution has a Total risk-based capital ratio of 8.0% or greater, a Tier I
risk-based capital ratio of 4.0% or greater, and a leverage ratio of 4.0% or
greater (or a leverage ratio of 3.0% or greater if the institution is rated
composite 1 in its most recent report of examination, subject to appropriate
Federal banking agency guidelines), and the institution does not meet the
definition of a well-capitalized institution; "undercapitalized" if the
institution has a Total risk-based capital ratio that is less than 8.0%, a
Tier I risk-based capital ratio that is less than 4.0% or a leverage ratio
that is less than 4.0% (or a leverage ratio that is less than 3.0% if the
institution is rated composite 1 in its most recent report of examination,
subject to appropriate Federal banking agency guidelines) and the institution
does not meet the definition of a significantly undercapitalized or critically
undercapitalized institution; "significantly undercapitalized" if the
institution has a Total risk-based capital ratio that is less than 6.0%, a
Tier I risk-based capital ratio that is less than 3.0%, or a leverage ratio
that is less than 3.0% and the institution does not meet the definition of a
critically undercapitalized institution; and "critically undercapitalized" if
the institution has a ratio of tangible equity to total assets that is equal
to or less than 2%.
At December 31, 1995, WesBanco and all of its bank subsidiaries qualified
as well-capitalized based on the ratios and guidelines noted above. A bank's
capital category, however, is determined solely for the purpose of applying
the prompt corrective actions rules and may not constitute an accurate
representation of that bank's overall financial condition or prospects.
The appropriate Federal banking agency may, under certain circumstances,
reclassify a well capitalized insured depository institution as adequately
capitalized. The appropriate agency is also permitted to require an adequately
capitalized or undercapitalized institution to comply with the supervisory
provisions as if the institutions were in the next lower category
6
<PAGE> 7
Item 1. Business (continued)
- -----------------------------
(but not treat a significantly undercapitalized institution as critically
undercapitalized) based on supervisory information other than the capital
levels of the institution.
The statute provides that an institution may be reclassified if the
appropriate Federal banking agency determines (after notice and opportunity
for bearing) that the institution is in an unsafe and unsound condition or
deems the institution to be engaging in an unsafe or unsound practice.
FDICIA generally prohibits a depository institution from making any
capital distributions (including payment of a dividend) or paying any
management fee to its holding company if the depository institution would
thereafter be undercapitalized. Undercapitalized depository institutions
are subject to growth limitations and are required to submit a capital
restoration plan. The Federal banking agencies may not accept a capital
restoration plan without determining, among other things, that the plan is
based on realistic assumptions and is likely to succeed in restoring the
depository institution's capital. In addition, for a capital restoration
plan to be acceptable, the depository institution's parent holding company
must guarantee that the institution will comply with such capital restoration
plan. The aggregate liability of the parent holding company is limited to the
lesser of (i) an amount equal to 5% of the depository institution's total
assets at the time it became undercapitalized, and (ii) the amount which is
necessary (or would have been necessary) to bring the institution into
compliance with all capital standards applicable with respect to such
institution as of the time it fails to compy with the plan. If a depository
institution fails to submit an acceptable plan, it is treated as if it is
significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to
a number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets and cessation of receipt of deposits from correspondent banks.
Critically undercapitalized institutions are subject to the appointment of a
receiver or conservator.
FDICIA also contains a variety of other provisions that may affect the
operation of WesBanco, including new reporting requirements, regulatory
standards for real estate lending, "truth in savings" provisions, and the
requirement that a depository institution give 90 days' prior notice to
customers and regulatory authorities before closing any branch.
Capital Requirements
- --------------------
The risk-based capital guidelines for bank holding companies and banks
adopted by the Federal banking agencies were phased in at the end of 1992.
The minimum ratio of qualifying total capital to risk-weighted assets
(including certain off-balance sheet items, such as standby letters of credit)
under the fully phased-in guidelines is 8%. At least half of the total
capital is to be comprised of common stock, retained earnings, noncumulative
perpetual preferred stocks, minority interests and, for bank holding companies,
a limited amount of qualifying cumulative perpetual preferred stock, less
goodwill and certain other intangibles ("Tier I capital"). The
7
<PAGE> 8
remainder ("Tier II capital") may consist of other preferred stock, certain
other instruments, and limited amounts of subordinated debt and the reserve
for credit losses.
Item 1. Business (continued)
- -----------------------------
In addition, the Federal Reserve Board has established minimum leverage
ratio (Tier I capital to total average assets less goodwill and certain other
intangibles) guidelines for bank holding companies and banks. These guidelines
provide for a minimum leverage ratio of 3.0% for bank holding companies and
banks that meet certain specified criteria, including that they have the
highest regulatory rating. All other banking organizations are required to
maintain a leverage ratio of 3.0% plus an additional cushion of at least 100
to 200 basis points. The guidelines also provide that banking organizations
experiencing internal growth or making acquisitions will be expected to
maintain strong capital positions substantially above the minimum supervisory
levels, without significant reliance on intangible assets. Furthermore, the
guidelines indicate that the Federal Reserve Board will continue to consider
a "tangible Tier I leverage ratio" in evaluating proposals for expansion or
new activities. The tangible Tier I leverage ratio is the ratio of Tier I
capital, less intangibles not deducted from Tier I capital, to total assets,
less all intangibles. Neither WesBanco nor any of its bank subsidiaries has
been advised of any specific minimum leverage ratio applicable to it.
As of December 31, 1995, all of WesBanco's banking subsidiaries had
capital in excess of all applicable requirements.
Interstate Banking Act
- ----------------------
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
(hereinafter called "Interstate Banking Act") was signed into law by
President Clinton on September 29, 1994. The Act generally allows adequately
capitalized and managed bank holding companies to acquire banks in any state
starting one year after enactment. The Act also permits interstate merger
transactions beginning June 1, 1997. States are permitted, however, to pass
legislation providing for either earlier approval of mergers with out-of-state
banks or "opting-out" of interestate mergers entirely. The Act would permit
banks to acquire branches of out-of-state banks by converting their office
into branches of the resulting bank. The Act would also permit banks to
establish and operate "de novo branches" in any state that "opts-in" to de
novo branching. The Act also requires each Federal banking agency to
prescribe uniform regulations, including guidelines insuring that interstate
branches operated by out-of-state banks are reasonably helping to meet the
credit needs of communities where they operate. WesBanco is incorporated
under the laws of the State of West Virginia and the West Virginia Legislature
has not yet adopted any legislation which would specifically "opt-in" or
"opt-out" of any of these specific provisions of the Interstate Banking Act.
Statistical Information
- -----------------------
Except as noted, the following statistical data averages included in
Item I - Business were computed using daily averages for the years ended
December 31, 1995, 1994 and 1993. Statistical data not included in Item I -
Business have been omitted because they are included in the 1995 Annual Report
to Shareholders, incorporated herein by reference, or are not applicable.
8
<PAGE> 9
Item 1. Business (continued)
- -----------------------------
The effect on interest income and interest expense for the years ended
December 31, 1995, 1994 and 1993, due to changes in average volume and rate
from the prior year, is presented below. The average volumes and rates are
shown in the 1995 Annual Report to Shareholders. The effect of a change in
average volume has been determined by applying the average rate in the earlier
year to the change in volume. The change in rate has been determined by
applying the average volume in the earlier year to the change in rate. The
change in interest due to both rate and volume has been allocated to volume
and rate changes in proportion to the relationship of the absolute dollar
amounts of change in each. (in thousands):
<TABLE>
<CAPTION>
1995 Compared to 1994
--------------------------------------
Net
Increase
Volume Rate (Decrease)
--------- ----- -----------
<S> <C> <C> <C>
Loans $ 5,069 $ 3,704 $8,773
Taxable investment securities (2,915) (146) (3,061)
Non-taxable investment securities (216) (22) (238)
Federal funds sold 76 325 401
--------------------------------------
Total interest earned 2,014 3,861 5,875
--------------------------------------
Interest bearing demand (495) 208 (287)
Savings deposits (760) 304 (456)
Certificates of deposit 1,843 3,932 5,775
Federal funds purchased and
repurchase agreements 74 1,072 1,146
Other borrowings 4 60 64
--------------------------------------
Total interest paid 666 5,576 6,242
--------------------------------------
Net Interest Differential $ 1,348 $(1,715) $ (367)
======================================
</TABLE>
<TABLE>
<CAPTION>
1994 Compared to 1993
--------------------------------------
Net
Increase
Volume Rate (Decrease)
--------- ---- -----------
<S> <C> <C> <C>
Loans $ 1,978 $(3,068) $(1,090)
Taxable investment securities (1,075) (1,614) (2,689)
Non-taxable investment securities 720 (470) 250
Federal funds sold (335) 231 (104)
--------------------------------------
Total interest earned 1,288 (4,921) (3,633)
--------------------------------------
Interest bearing demand 50 (864) (814)
Savings deposits 320 (1,653) (1,333)
Certificates of deposit (646) (970) (1,616)
Federal funds purchased and
repurchase agreements (41) 69 28
Other borrowings (71) 51 (20)
--------------------------------------
Total interest paid (388) (3,367) (3,755)
--------------------------------------
Net Interest Differential $ 1,676 $ (1,554) $ 122
======================================
</TABLE>
9
<PAGE> 10
Item 1. Business (continued)
- -----------------------------
Investment Portfolio
- --------------------
The maturity distribution using book value including accretion of
discounts and the amortization of premiums and approximate yield of investment
securities at December 31, 1995 is presented in the following table. Tax
equivalent yield basis was not used. Approximate yield was calculated using
a weighted average of yield to maturities (in thousands):
<TABLE>
<CAPTION>
After One But After Five But
Within One Year Within Five Years Within Ten Years After Ten Years
--------------- ----------------- ---------------- ---------------
Amount Yield Amount Yield Amount Yield Amount Yield
------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Held to Maturity:
- -----------------
U.S. Treasury and Other U.S.
Government Agencies $ 69,109 5.12% $ 64,779 6.13% --- --- --- ---
States and Political
Subdivisions 12,017 6.01 54,543 5.25 $44,360 5.13% $4,850(1) 6.74%
Other Investments --- --- --- --- --- --- 1,358 6.47
----------------- ----------------- ---------------- ----------------
Total Held to Maturity 81,126 5.25 119,322 5.73 44,360 5.13 6,208 6.68
----------------- ----------------- ---------------- ----------------
Available for Sale: (2)
- ------------------------
U.S. Treasury and Other U.S.
Government Agencies 28,225 5.95 110,542 5.76 17,474 5.68 --- ---
States and Political
Subdivisions 1,427 3.72 3,096 3.97 369 3.57 806 4.26
Mortgage-backed Securities (3) 3,401 6.72 3,231 7.15 4 6.19 --- ---
Corporate Securities --- --- 4 5.57 --- --- --- (1) ---
Other Investments --- --- --- --- --- --- 2,166 2.55
---------------- ----------------- --------------- -----------------
Total Available for Sale 33,053 5.95 116,873 5.75 17,847 5.63 2,972 3.01
---------------- ----------------- --------------- -----------------
Total Investment Securities $114,179 5.45% $236,195 5.74% $62,207 5.28% $9,180 5.50%
================ ================= =============== =================
</TABLE>
(1) Represents investments with no stated maturity date.
(2) Average yields on investment securities available for sale have been
calculated based on amortized cost.
(3) Mortgage-backed maturities which have prepayment provisions are assigned
to maturity categories based on estimated average lives.
10
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Item 1. Business (continued)
- -----------------------------
Investment Portfolio (continued)
- --------------------------------
Book values of investment securities are as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
----------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Investments Held to Maturity (at cost):
- ---------------------------------------
U.S. Treasury and Federal
Agency Securities $133,888 $150,197 $274,962
Obligations of states and
political subdivisions 115,770 122,716 121,757
Mortgage-backed securities --- --- 11,104
Other securities (1) 1,358 1,260 1,721
-------------------------------
Total Held to Maturity 251,016 274,173 409,544
-------------------------------
Investments Available for Sale:
- -------------------------------
(December 31, 1995 and 1994, at
market, December 31, 1993, at
lower of cost or market):
U.S. Treasuries and Federal
Agency Securities 157,505 193,114 74,808
Obligations of States and
Political subdivisions 5,667 --- ---
Corporate securities 4 915 ---
Mortgage-backed securities 6,610 7,788 7,819
Other securities (2) 2,351 888 496
--------------------------------
Total Available for Sale 172,137 202,705 83,123
--------------------------------
Total Investments $423,153 $476,878 $492,667
================================
</TABLE>
(1) Includes Federal Reserve Bank Stock and Federal Home Loan Bank
securities.
(2) Includes stocks of business corporations.
There are no issues included in obligations of state and political
subdivisions, which individually or in the aggregate exceed ten percent of
shareholders' equity as of December 31, 1995.
Loan Portfolio
- --------------
Loans outstanding are as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Loans:
Commercial $172,270 $161,521 $162,859 $167,931 $181,570
Real Estate--Construction 15,493 24,734 21,181 14,187 7,169
Real Estate-Mortgage 392,681 358,540 342,173 333,159 303,275
Installment 277,934 241,441 228,906 203,799 203,448
------------------------------------------------------
Total loans $858,378 $786,236 $755,119 $719,076 $695,462
======================================================
</TABLE>
Each bank within the Corporation has its own renewal policies regarding
commercial and real estate-construction loans. However, real estate-
construction loans are generally not renewed at any bank. Depending on the
size of each institution, commercial loans above certain pre-approved dollar
limits must be reviewed by the respective credit review committee or senior
management prior to extension of maturity dates or rollover of the loan into a
11
<PAGE> 12
Item 1. Business (continued)
- -----------------------------
Loan Portfolio (continued)
- --------------------------
new loan. Renewals of commercial loans below specified lending limitations
may be approved by the respective bank loan officer.
The following table presents the approximate maturities of loans other
than installment loans and residential mortgages for all affiliate banks as
of December 31, 1995 (in thousands):
<TABLE>
<CAPTION>
After one
In one year year through After five
or less five years years
------------ ------------ -----------
<S> <C> <C> <C>
Commercial $86,403 $33,064 $52,803
Real estate:
Construction 2,327 --- 6,337
Other real estate 1,798 17,137 76,174
-------- -------- ---------
Total $90,528 $50,201 $135,314
======== ======== =========
Fixed rates $37,400 $28,189 $42,993
Variable rates 53,128 22,012 92,321
-------- -------- ---------
Total $90,528 $50,201 $135,314
======== ======== =========
</TABLE>
WesBanco Bank Wheeling, which has approximately 41% of consolidated gross
loans have a practice of originating most commercial loans and real estate
construction loans on a demand basis. Most of these loans do not require
formal repayment terms other than monthly interest payments. There is no
significant impact on cash flows since these loans are monitored on a regular
basis and principal repayments, if not made by borrowers, are requested.
WesBanco banks follow lending policies which require substantial down payments
along with current market appraisals on the collateral when the loans are
originated. The majority of their loans are either secured by deeds of trust
on real property, security agreements on personal property, insurance contracts
from independent insurance companies or through marketable securities.
All affiliate banks generally recognize interest income on the accrual
basis, except for certain loans which are placed on a nonaccrual status, when
in the opinion of management, doubt exists as to collectability. All banks
must conform to the Board of Governors of the Federal Reserve System and the
Office of the Comptroller of Currency Policy which states that banks may not
accrue interest on any loan on which either the principal or interest is past
due 90 days or more unless the loan is both well secured and in the process of
collection. When a loan is placed on a nonaccrual status, interest income may
be recognized as cash payments are received.
12
<PAGE> 13
Item 1. Business (continued)
- -----------------------------
Loan Portfolio (continued)
- --------------------------
Non-performing assets and secured loans which are in the process of
collection but are contractually past due 90 days or more as to interest
or principal, are as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
---------------------------------------------------
1995 1994 1993 1992 1991
---------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual:
Installment $ 59 $ 12 $ 124 $ 181 $ 145
Commercial 3,467 6,766 9,496 5,818 7,646
Mortgage 1,673 1,301 1,446 1,573 2,295
--------------------------------------------------
5,199 8,079 11,066 7,572 10,086
--------------------------------------------------
Renegotiated and other
impaired loans:
Installment 9 -- -- 41 8
Commercial 1,347 23 80 3,938 4,507
Mortgage 736 81 88 108 888
--------------------------------------------------
2,092 104 168 4,087 5,403
--------------------------------------------------
Total non-performing loans 7,291 8,183 11,234 11,659 15,489
--------------------------------------------------
Other Real Estate Owned:
(Including in-substance
foreclosures) 4,137 612 801 629 862
--------------------------------------------------
Total non-performing
assets $11,428 $ 8,795 $12,035 $12,288 $16,351
===================================================
Percentage of non-
performing assets to
loans outstanding 1.3% 1.1% 1.6% 1.7% 2.4%
===================================================
Past Due 90 Days or More:
Installment $ 863 $ 944 $ 857 $ 1,071 $ 880
Commercial 916 923 754 1,593 524
Real Estate 1,227 659 939 547 2,136
----------------------------------------------------
$ 3,006 $ 2,526 $ 2,550 $ 3,211 $ 3,540
====================================================
</TABLE>
On January 1, 1995, WesBanco adopted FAS No. 114 (as amended by FAS No.
118), "Accounting by Creditors for Impairment of a Loan." A loan is
considered impaired when it is probable that the lender will be unable to
collect all principal and interest amounts due according to the contractual
terms of the loan agreement. At December 31, 1995, impaired loans totaled
$7,291,000, which included all nonperforming loans.
Nonaccrual loans decreased by $2,880,000 to $5,199,000 as of December 31,
1995, compared to the same period in 1994, primarily due to the reclassification
of a commercial real estate loan to other real estate owned. The action was
taken on November 1, 1995 by an affiliate through a transfer by deed
in-lieu of foreclosed commercial property. Contributing to the increase
in renegotiated loans during 1995 were certain performing loans classified as
13
<PAGE> 14
Item 1. Business (continued)
- -----------------------------
Loan Portfolio (continued)
- --------------------------
impaired, in accordance with FAS No. 114. The 1994 decline in nonaccrual
loans was the result of a commercial real estate loan which was taken off of
nonaccrual status. During 1993, nonaccrual loans increased by $3,494,000 to
$11,066,000, while renegotiated loans declined by $3,878,000 to $168,000.
The change between these categories was caused by a reclassification of a
renegotiated loan totaling $3,823,000 to nonaccrual status during 1993.
Nonaccrual and renegotiated loans declined $3,830,000 during 1992, primarily
due to a borrower's improved business operation and increased debt service
ability, justifying a renewed extension of credit at market terms and
condition. Nonaccrual loans are generally secured by collateral believed to
have adequate market values to protect the Corporation from significant losses.
In accordance with FAS No. 114, a loan is classified as an in-substance
foreclosure when the Corporation has taken possession of the collateral. Loans
previously classified as in-substance foreclosure but for which the Corporation
has not takenpossession of the collateral have been reclassified to loans. The
reclassifications have not significantly impacted the Corporation's financial
condition. Management continues to monitor non-performing assets to ensure
against deterioration in collateral values.
Summary of Loan Loss Experience
- -------------------------------
The historical relationship between average loans, loan losses and
recoveries and the provision for possible loan losses is presented in the
following table (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Beginning balance -
Reserve for possible loan losses $12,317 $11,851 $10,638 $ 9,794 $ 9,120
Reserve for purchased affiliate --- --- --- 62 ---
Loans charged off:
Commercial 1,090 4,521 1,187 1,785 1,413
Real Estate - Mortgage 220 524 183 266 242
Installment 1,608 995 1,255 1,217 1,120
-----------------------------------------------
Total loans charged off 2,918 6,040 2,625 3,268 2,775
-----------------------------------------------
Recovery of loans previously
charged off:
Commercial 204 171 184 436 114
Real Estate - Mortgage 97 25 36 38 145
Installment 277 255 389 297 227
-----------------------------------------------
Total recoveries 578 451 609 771 486
-----------------------------------------------
Net loans charged off 2,340 5,589 2,016 2,497 2,289
-----------------------------------------------
Additions to reserve charged to
operating expense 2,770 6,055 3,229 3,279 2,963
Ending balance - -----------------------------------------------
Reserve for possible loan losses $12,747 $12,317 $11,851 $10,638 $ 9,794
===============================================
Ratio of net loans charged off to
average loans outstanding for
the period .29% .76% .28% .36% .35%
-----------------------------------------------
Ratio of the reserve for possible
loan losses to loans outstanding
at the end of the period 1.50% 1.59% 1.59% 1.50% 1.43%
-----------------------------------------------
</TABLE>
14
<PAGE> 15
Item 1. Business (continued)
- -----------------------------
The amount charged to earnings is based on periodic management evaluation
of the loan portfolio as well as prevailing and anticipated economic
conditions, net loans charged off, past loan experience, current delinquency
factors, changes in the character of the loan portfolio, specific problem
loans and other factors.
Allocation of the Reserve for Possible Loan Losses
- --------------------------------------------------
The following represents the allocation of the reserve for possible loan
losses (dollars in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------------
1995 1994 1993 1992
--------------------------------------------------------------
% of % of % of % of
Amount Loans Amount Loans Amount Loans Amount Loans
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Specific Reserves:
Commercial and Unallocated $10,110 20% $10,129 20% $10,068 21% $ 8,424 23%
Real Estate-Construction --- 2 --- 3 --- 3 --- 2
Real Estate-Mortgage 977 46 691 46 573 45 870 46
Installment 1,660 32 1,497 31 1,210 31 1,344 29
---------------------------------------------------------------
Total $12,747 100% $12,317 100% $11.851 100% $10,638 100%
===============================================================
</TABLE>
WesBanco has allocated the reserve for possible loan losses to specific
portfolio segments based upon historical net charge-off experience, changes
in the level of non-performing loans, local economic conditions and management
experience.
Management deems the reserve for loan losses at December 31, 1995 to be
adequate.
Risk Elements
- -------------
The Corporation has historically maintained a reserve for possible loan
losses which is greater than actual charge-offs. Charge-offs for the year 1996
are anticipated to be within the historical ranges as detailed in the summary
of loan loss experience.
Management maintains loan quality through monthly reviews of past due
loans, and a quarterly review of significant loans which are considered by
affiliate bank personnel to be potential problem loans. Periodic review of
other significant loans are completed by personnel independent of the loan
function.
There are no significant loans made to customers outside the general
market area of each affiliate bank. At times, in order to maintain loan
volumes, loans are purchased from correspondent banks. These loans aggregate
less than $9,000,000 as of December 31, 1995. Each bank within the
Corporation follows its usual loan analysis procedures before a determination
is made to purchase loans from correspondent banks.
Management's review of the loan portfolio has not indicated any material
amount of loans, not disclosed in the accompanying tables and discussions
which are known to have possible credit problems which cause management to
have serious doubts as to the ability of each borrower to comply with their
present loan repayment terms.
There were no loan concentrations in excess of 10% of total consolidated
loans.
15
<PAGE> 16
Item 1. Business (continued)
- -----------------------------
Short-Term Borrowings
- ---------------------
Securities sold under agreement to repurchase have maturities which range
between one day and one year. The following table presents short-term
liabilities for the years ended December 31 (dollars in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Securities sold under agreement
to repurchase:
Outstanding at year end $70,091 $65,435 $49,996
Average daily outstanding 54,791 51,068 52,331
Maximum outstanding at any month end 70,091 66,286 65,587
Average interest rate:
During year 5.17% 3.47% 3.26%
At year end 5.45% 4.37% 3.13%
</TABLE>
Return on Equity and Assets
- ---------------------------
The following financial ratios are presented:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net income to:
Average total assets 1.35% 1.17% 1.34%
Average shareholders' equity 11.12% 9.99% 11.70%
Average shareholders' equity and
redeemable preferred stock 11.00% 9.88% 11.56%
Dividend payout percentage
(cash dividends, including those of
pooled banks, divided by net income) 44.75% 47.07% 36.83%
Equity to assets (average equity
divided by average assets) 12.15% 11.72% 11.43%
Equity and redeemable preferred
stock to assets (average equity
and redeemable preferred stock
divided by average assets) 12.27% 11.86% 11.57%
</TABLE>
Item 2. Properties
- -------------------
The Registrant's affiliates generally own their respective banking
offices, related facilities and unimproved real property which is held for
future expansion. With certain branch office exceptions, all of the
respective West Virginia bank offices are located in downtown Wheeling,
Follansbee, Wellsburg, New Martinsville, Sistersville, Elizabeth, Charleston,
Sissonville, Parkersburg, Kingwood, Fairmont, Shinnston, Bridgeport and
Masontown. The Ohio bank offices are located in Barnesville, Bethesda,
Woodsfield and Beallsville. Consolidated investment in net bank premises and
equipment at December 31, 1995 was $23,026,000.
The main office of the Registrant is located at 1 Bank Plaza, Wheeling,
West Virginia, in a building owned by WesBanco Wheeling. The building contains
approximately 100,000 square feet.
16
<PAGE> 17
Item 3. Legal Proceedings
- --------------------------
WesBanco, Inc. and its affiliates are involved in various legal proceedings
presently pending which are incidental to the business of banking in which they
are engaged. These proceedings are pending in various jurisdictions in which
WesBanco, Inc. and its subsidiaries are engaged in business. Based on the
information which has been developed in such proceedings as of the date hereof,
and available to the Corporation, management does not believe that any of
such proceedings involve claims for damages expose it to a material liability
on a consolidated basis.
In addition to the foregoing, the Corporation has recently been advised
of a newly filed matter. On February 23, 1996, WesBanco Bank Wheeling, a
subsidiary banking corporation, was served with a Complaint filed in the
Circuit Court of Ohio County, West Virginia, styled Joseph Tankovits III v.
Lee J. Glessner, et al., under Civil Action No. 96-C-59(W). This suit was
filed by a beneficiary of a testamentary trust and an inter vivos trust
against the Bank in its capacity as Co-Trustee of two trusts. The Complaint
alleges numerous counts against the bank and two Co-Executors of an estate,
including breach of fiduciary duty of care, self-dealing and breach of
fiduciary duty of loyalty, negligence and a punitive damage claim based on an
undefined theory of an intentional tort. The Complaint also asserts
additional counts against the two Co-Executors, including intentional
interference with a testamentary bequest, conversion and fraud in which the
Bank is not a named defendant. The prayer of the Complaint seeks
compensatory and punitive damages against the defendants in the amount of
$10,000,000, among other relief sought.
The case arises from the administration of an estate and the funding of
certain trusts, an inter vivos trust and a testamentary trust, which were to
be funded from the distribution of the assets of the estate upon the
termination of the administration of the estate. Since the estate consists
primarily of closely held stock, the Co-Executors of the estate elected a
deferred and installment payment of the Federal Estate Tax liabilities which
are being paid over a combined 15 year period. This 15 year period continues
to run. While the estate is in administration, no assets have been
distributed by the Co-Executors to the Bank and, accordingly, the Bank has
undertaken no fiduciary responsibilities with respect to the testamentary
trust or the inter vivos trust, other than to receive certain life insurance
proceeds which were paid to it at the time of the death of the decedent. No
claim has been asserted against the Bank with respect to its administration of
the life insurance proceeds received and subsequently administered by the Bank.
It is uncertain as to how the Plaintiff can successfully argue that the
Bank has a fidicuary duty with respect to assets which have not yet been
distributed to it. It is also uncertain at this time as to how the Plaintiff
can assert a breach of a fiduciary duty in the administration of the estate
since the bank was neither a named fiduciary, nor has the bank subsequently
qualified as a fiduciary with respect to the administration of the estate.
Based on the allegations of the Complaint, the Bank is unable to determine the
source of the Bank's legal duty to the Plaintiff which is alleged in the
Complaint. The Bank intends to vigorously defend the action.
17
<PAGE> 18
PART II
Item 5. Market for the Registrant's Common Equity and Related Shareholder
- --------------------------------------------------------------------------
Matters
- -------
(a) Approximate Number of Security Holders
-------------------------------------------
Set forth below is the approximate number of holders of record of the
Registrant's equity securities as of February 29, 1996.
Title of Class Number
-------------- ------
Common Stock ($2.0833 Par Value) 3,863
The number of holders listed above does not include WesBanco, Inc.
employees who have had stock allocated to them through the Employee Stock
Ownership Plan. All WesBanco employees who meet the eligibility requirements
of the ESOP are included in the Plan.
PART III
Item 10. Executive Officers of the Corporation
- -----------------------------------------------
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
James C. Gardill 49 Chairman of the Board
Robert H. Martin 62 Vice Chairman
Edward M. George 59 President and Chief Executive
Officer
Paul M. Limbert 48 Executive Vice President and
Chief Financial Officer
Dennis P. Yaeger 45 Executive Vice President and
Chief Operating Officer
Robert V. Aiken 59 Senior Vice President-Loan
Administration
John W. Moore, Jr. 47 Senior Vice President-Human
Resources
Jerome B. Schmitt 46 Senior Vice President-
Investments
Larry L. Dawson 49 Vice President
Jerry A. Halverson 59 Vice President
Albert A. Pietz, Jr. 63 Vice President
Edward G. Sloane 57 Vice President-Data Processing
</TABLE>
Mr. Aiken was appointed Senior Vice President-Loan Administration on
April 14, 1995. Prior to that time, Mr. Aiken served as Executive Vice
President and Manager of Retail Banking at PNC Bank, N.A., Harrrisburg,
Pennsylvania. Prior to serving in that capacity, Mr. Aiken was Chairman,
President and CEO of the Hershey Bank, Hershey, Pennsylvania, a PNC affiliate.
Mr. Martin was appointed Vice Chairman of the Corporation on February 28,
1994. Prior to that time, Mr. Martin was Chairman of the Board of First
Fidelity Bancorp, Inc. since 1986.
Each of the remaining officers listed above have been an Executive
Officer of the Corporation or one of its subsidiaries during the past five
years.
18
<PAGE> 19
PART IV
Item 14. Exhibits, financial statement schedules and reports on Form 8-K
- -------------------------------------------------------------------------
(a) Certain documents filed as part of the Form 10-K
------------------------------------------------------
(1) Financial statements of consolidated subsidiaries Page(s)
engaged in the business referred to in Rule 3-05 -------
of Regulation S-X have been omitted since they
are not individually or in the aggregate required
pursuant to such Rule.
Consolidated Balance Sheet as of December 31, 33
1995 and 1994.
Consolidated Statements of Income for the years 34
ended December 31, 1995, 1994 and 1993.
Consolidated Statements of Changes in Shareholders' 35
Equity for the years ended December 31, 1995,
1994 and 1993.
Consolidated Statement of Cash Flows for the years 36
ended December 31, 1995, 1994 and 1993.
Notes to Consolidated Financial Statements 37-48
Report to Independent Accountants - Price 98
Waterhouse, LLP
Report of Independent Accountants - Ernst & 99
Young, LLP
(b) Reports on Form 8-K
--------------------------
A Form 8-K was filed on November 15, 1995 during the three months
ended December 31, 1995, to announce WesBanco's redemption of its
Series A, 8% Cummulative Preferred Stock of which there were 9,925
shares outstanding.
(c) Exhibits required by Item 601 of Regulation S-K
-----------------------------------------------------
<TABLE>
<CAPTION>
Exhibit Title Page(s)
- ------- ----- -------
<S> <C> <C>
3.1 Articles of Incorporation of WesBanco, Inc. (2) (3) *
3.2 Amended Bylaws of WesBanco, Inc. (1) *
4 Specimen Certificate of WesBanco, Inc. Common Stock (2) *
</TABLE>
19
<PAGE> 20
Item 14. Exhibits, financial statement schedules and reports on Form 8-K
- --------------------------------------------------------------------------
(continued)
- -----------
(c) Exhibits required by Item 601 of Regulation S-K (continued)
----------------------------------------------------------------
<TABLE>
Exhibit Title Page(s)
- ------- ----- -------
<C> <C> <C>
11 Computation of Earnings Per Share 22
12 Ratio of Earnings to Combined Fixed Charges and 23
Preferred Stock Dividends
13 1995 Annual Report to Shareholders 24-63
The Financial Statements, together with the report
thereon of Price Waterhouse, LLP dated January 25, 1996,
except as to Note 19, which is as of February 9, 1996,
appearing on page 21, Management Discussion and Analysis
of the Consolidated Financial Statements appearing on pages
26-33 and the subsidiaries of WesBanco appearing on page 36
of the accompanying 1995 Annual Report to Shareholders are
incorporated by reference in the Form 10-K Annual Report.
With the exception of the aforementioned information, the
1995 Annual Report is not to be deemed filed as part of
this report. Financial statement schedules not included
in this Form 10-K Annual Report have been omitted because
they are not applicable or the required information is
shown in the Financial Statements or notes thereto.
21 Subsidiaries of the Registrant (5) *
22 Proxy Statement for the Annual Shareholders' meeting 64-95
held April 17, 1996
24 Power of Attorney 96-97
27 Financial Data Schedule *
99.1 Accountants Report dated January 25, 1996, except as 98
to Note 19, which is as of February 9, 1996 on WesBanco,
Inc. Financial Statements for the three years ended
December 31, 1995
99.2 Accountants Report dated February 16, 1994 on First 99
Fidelity Bancorp, Inc. Financial Statements for the
year ended December 31, 1993
99.3 Press release announcing the signing of a definitive Agreement *
and Plan of Merger providing for the merger of Bank of Weirton
with WesBanco Bank Wheeling, an affiliate of WesBanco, Inc. (4)
</TABLE>
* Not Applicable
(1) This exhibit is being incorporated by reference with respect to a prior
Quarterly Report Form 10-Q filed by the Registrant on Form 10-Q dated March 31,
1994 which was filed with the Securities & Exchange Commission on May 11, 1994.
(2) These exhibits are being incorporated by reference with respect to a
prior Annual report Form 10-K filed by the Registrant on Form 10-K dated
December 31, 1988 which was filed with the Securities & Exchange Commission
on March 30, 1989.
(3) These exhibits are being incorporated by reference with respect to a
prior Registration Statement filed by the Registrant on Form S-4 under
Registration No. 33-72228 as Exhibit Numbers 3.1 and 4.2, which was filed
with the Securities & Exchange Commission on January 11, 1994.
(4) This exhibit is being incorporated by reference with respect to a prior
Form 8-K dated February 9, 1996, which was filed by the Registrant with the
Securities and Exchange Commission on February 21, 1996.
(5) Included in 1995 Annual Report to Shareholders.
20
<PAGE> 21
SIGNATURES
Pursuant to the Requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on March 18, 1996.
WESBANCO, INC.
/s/ Edward M. George
By:________________________________________
Edward M. George
President and Chief Executive Officer
/s/ Paul M. Limbert
By:________________________________________
Paul M. Limbert
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated, on March 18, 1996.
/s/ James C. Gardill
By:_________________________________________
James C. Gardill
Chairman of the Board
The Directors of WesBanco (listed below) executed a power of attorney
appointing James C. Gardill their attorney-in-fact, empowering him to sign
this report on their behalf.
Gilbert S. Bachmann
Charles J. Bradfield
Ray A. Byrd
H. Thomas Corrie
Christopher V. Criss /s/ James C. Gardill
Stephen F. Decker By:_____________________________
Edward M. George James C. Gardill
Roland L. Hobbs Attorney-in-fact
Frank R. Kerekes
Walter Knauss, Jr.
Robert H. Martin
Joan C. Stamp
Carter W. Strauss
Thomas L. Thomas, M.D.
John A. Welty
William E. Witschey
21
<PAGE> 22
<PAGE> 1
EXHIBIT 11
Wesbanco, Inc.
Computation of Earnings Per Share
(Dollar Amounts in Thousands)
The calculation of net income per common share follows:
<TABLE>
<CAPTION>
For the years ended December 31,
-----------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
PRIMARY:
Net Income $ 18,189 $ 15,697 $ 17,842
Less: Preferred Dividends and
discount accretion 164 183 184
------------------------------------
Net income applicable to
common stock $ 18,025 $ 15,514 $ 17,658
====================================
Average common share outstanding 8,470,328 8,590,878 8,689,499
Net income per common share $ 2.13 $ 1.81 $ 2.04
=============================================================================
ASSUMING FULL DILUTION: *
Net income $ 18,189 $ 15,697 $ 17,842
Pro forma fully diluted average
common shares outstanding 8,564,864 8,704,321 8,803,799
Pro forma fully diluted net
income per share $ 2.12 $ 1.80 $ 2.03
</TABLE>
* Assumes conversion of redeemable preferred stock as if issuance had
occurred at the beginning of the reportable period.
22
<PAGE> 1
EXHIBIT 12
WesBanco, Inc.
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
December 31,
--------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net income $18,189 $15,697 $17,842 $16,471* $14,403
Provision for income taxes 7,180 5,780 6,587 6,523 5,239
----------------------------------------------
Earnings before provision
for income taxes 25,369 21,477 24,429 22,994 19,642
----------------------------------------------
Preferred stock dividend
requirements 164 183 184 184 184
Ratio of pretax income to
net income 1.39% 1.37% 1.37% 1.40% 1.36%
----------------------------------------------
Preferred dividend factor $ 229 $ 250 $ 252 $ 257 $ 251
Ratio of pretax net income
to preferred dividends 110.9% 85.8% 97.0% 89.5% 78.3%
==============================================
</TABLE>
* Does not include the change in accounting for postretirement benefits-net
of tax effect of $(592,000).
WesBanco has no fixed charges as defined by Regulation S-K Item 503-
Summary; Risk Factors; Ratio of Earnings to Fixed Charges.
23
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY FOR EXECUTION OF FORM 10-K
TO BE FILED WITH THE SECURITIES & EXCHANGE COMMISSION
We, the undersigned Directors of WesBanco, Inc., hereby severally
constitute and appoint James C. Gardill and/or Edward M. George, and each
of them singly, our true and lawful attorneys with full power to them, and
each of them singly, to sign for us and in our names and in the capacities
indicated below, the Annual Report of WesBanco to the Securities & Exchange
Commission on Form 10-K to be filed for the year 1995 and any and all
amendments thereto in our names and behalf in our capacities as Directors of
WesBanco to enable WesBanco to comply with the provisions of the Securities
Exchange Act of 1934, as amended, and all requirements of the Securities
Exchange Act of 1934, as amended, hereby ratifying and conforming our
signatures as they may be signed by our attorneys, or either of them, to
said Form 10-K and any and all amendments thereto.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Power of Attorney for purposes of executing the Form 10-K of WesBanco has been
signed by the following persons in the capacities and on the dates indicted:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
______________________________ Director March ____, 1996
Frank K. Abruzzino
______________________________ Director March ____, 1996
James E. Altmeyer
______________________________ Director March ____, 1996
Earl C. Atkins
/s/ Gilbert S. Bachmann
______________________________ Director March 13 , 1996
Gilbert S. Bachmann
/s/ Charles J. Bradfield
______________________________ Director March 13 , 1996
Charles J. Bradfield
/s/ Ray A. Byrd
______________________________ Director March 14 , 1996
Ray A. Byrd
/s/ H. Thomas Corrie
______________________________ Director March 14 , 1996
H. Thomas Corrie
/s/ Christopher V. Criss
______________________________ Director March 13 , 1996
Christopher V. Criss
/s/ Stephen F. Decker
______________________________ Director March 13 , 1996
Stephen F. Decker
______________________________ Director March ____, 1996
James D. Entress
</TABLE>
96
<PAGE> 2
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ James C. Gardill
______________________________ Director March 13 , 1996
James C. Gardill
/s/ Edward M. George
______________________________ Director March 14 , 1996
Edward M. George
/s/ Roland L. Hobbs
______________________________ Director March 13 , 1996
Roland L. Hobbs
______________________________ Director March ____, 1996
John W. Kepner
/s/ Frank R. Kerekes
______________________________ Director March 14 , 1996
Frank R. Kerekes
______________________________ Director March ____, 1996
John D. Kirk
/s/ Walter Knauss, Jr.
______________________________ Director March 14 , 1996
Walter Knauss, Jr.
/s/ Robert H. Martin
______________________________ Director March 14 , 1996
Robert H. Martin
______________________________ Director March ____, 1996
Eric Nelson
______________________________ Director March ____, 1996
Melvin C. Snyder, Jr.
/s/ Joan C. Stamp
______________________________ Director March 14 , 1996
Joan C. Stamp
/s/ Carter W. Strauss
______________________________ Director March 13 , 1996
Carter W. Strauss
/s/ Thomas L. Thomas
______________________________ Director March 13 , 1996
Thomas L. Thomas
______________________________ Director March ____, 1996
James L. Wareham
/s/ John A. Welty
______________________________ Director March 14 , 1996
John A. Welty
/s/ William E. Witschey
______________________________ Director March 13 , 1996
William E. Witschey
</TABLE>
97
<PAGE> 1
EXHIBIT 99.1
600 Grant Street
Pittsburgh, PA 15219
[PRICE WATERHOUSE LLP LOGO]
REPORT OF INDEPENDENT ACCOUNTANTS
January 25, 1996, except as to Note 19, which is as of February 9, 1996
To the Shareholders and Board of Directors of WesBanco, Inc.
In our opinion, based on our audits and the report of other auditors, the
accompanying consolidated balance sheets and the related consolidated
statements of income, of changes in shareholders' equity and cash flows
present fairly, in all material respects, the financial position of WesBanco,
Inc., and its subsidiaries (the Corporation) at December 31, 1995 and 1994,
and the results of its operations and its cash flows for each of the 3
years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Corporation's management; our responsibility is to
express an opinion on these financial statements based on our audits. We did
not audit the financial statements of First Fidelity Bancorp, Inc., for 1993,
which statements reflect net interest income of $13,913,000 for the year
ended December 31, 1993. Those statements were audited by other auditors
whose report thereon has been furnished to us, and our opinion expressed
herein, insofar as it relates to the amounts included for First Fidelity
Bancorp, Inc., for 1993, is based solely on the report of the other auditors.
We conducted our audits of the consolidated statements in accordance with
generally accepted auditing standards, which require that we plan and perform
the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits and the report of other auditors
provide a reasonable basis for the opinion expressed above.
As discussed in Note 1 and Note 5, the Corporation adopted Statement of
Financial Accounting Standards (SFAS) No. 114 (as amended by SFAS No. 118),
"Accounting by Creditors for Impairment of a Loan," and SFAS No. 115,
Accounting for Certain Investments in Debt and Equity Securities," during
1995 and 1994, respectively.
/s/ Price Waterhouse, LLP
26
<PAGE> 1
EXHIBIT 99.2
One Oxford Centre
Pittsburgh, PA 15219
[ERNST & YOUNG LLP LOGO]
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
First Fidelity Bancorp, Inc.
We have audited the consolidated statement of condition of First Fidelity
Bancorp, Inc. and subsidiaries as of December 31, 1993 and the related
consolidated statements of income, changes in shareholders' equity and
cash flows for the year then ended. These financial statements are the
responsibility of the Corporation's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluting the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of First Fidelity
Bancorp, Inc. and subsidiaries at December 31, 1993 and the consolidated
results of their operations and their cash flows for the year ended
December 31, 1993 in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
February 16, 1994
27
<PAGE> 1
WESBANCO, INC.
CONSOLIDATED BALANCE SHEET
- ----------------------------------------------------------------------------
(in thousands, except for shares)
<TABLE>
<CAPTION>
December 31,
-----------------------
1995 1994
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks (Note 3) $ 49,008 $ 47,643
Due from banks _ interest bearing 301 297
Federal funds sold 14,230 17,370
Investment securities: (Note 5)
Held to maturity (market values of $253,831, and $266,945,respectively) 251,016 274,173
Available for sale carried at market value 172,137 202,705
- ---------------------------------------------------------------------------------------------------
Total investment securities 423,153 476,878
- ---------------------------------------------------------------------------------------------------
Loans: (Note 4) 858,378 786,236
Unearned income (7,810) (9,118)
Reserve for possible loan losses (Note 8) (12,747) (12,317)
- ---------------------------------------------------------------------------------------------------
Net loans 837,821 764,801
- ---------------------------------------------------------------------------------------------------
Bank premises and equipment (Note 9) 23,026 21,874
Accrued interest receivable 11,020 11,347
Other assets (Note 10) 13,234 10,758
- ---------------------------------------------------------------------------------------------------
Total Assets $1,371,793 $1,350,968
===================================================================================================
LIABILITIES
Deposits:
Non-interest bearing demand $ 127,168 $ 130,739
Interest bearing demand 252,950 263,717
Savings deposits 278,821 296,961
Certificates of deposit (Note 11) 456,534 417,802
- ---------------------------------------------------------------------------------------------------
Total deposits 1,115,473 1,109,219
- ---------------------------------------------------------------------------------------------------
Federal funds purchased and repurchase agreements 70,457 65,750
Short-term borrowings 1,402 4,444
Accrued interest payable 6,744 5,360
Other liabilities 7,677 7,705
- ---------------------------------------------------------------------------------------------------
Total Liabilities 1,201,753 1,192,478
- ---------------------------------------------------------------------------------------------------
Redeemable Preferred Stock (Series A, 8% Cumulative, $1.25
par value: none in 1995; 10,000 shares issued, 9,925 shares
outstanding in 1994) (Note 17) ---- 1,860
SHAREHOLDERS' EQUITY
Preferred stock, no par value; 1,000,000 shares authorized;
none outstanding ---- ----
Common stock ($2.0833 par value; 25,000,000 shares
authorized; 8,682,103 shares issued) 18,087 18,087
Capital surplus 25,758 26,968
Retained earnings 131,527 121,641
Less: Treasury stock (186,131 and 172,145 shares,respectively, at cost) (5,038) (4,735)
Market value adjustment on investments available for sale-
net of tax effect 849 (4,482)
- ---------------------------------------------------------------------------------------------------
171,183 157,479
Deferred benefits for directors and employees (1,143) (849)
- ---------------------------------------------------------------------------------------------------
Total Shareholders' Equity 170,040 156,630
- ---------------------------------------------------------------------------------------------------
Total Liabilities, Redeemable Preferred Stock and Shareholders' Equity $1,371,793 $1,350,968
===================================================================================================
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these financial statements.
8
<PAGE> 2
WESBANCO, INC.
CONSOLIDATED STATEMENT OF INCOME
- -----------------------------------------------------------------------------
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
For the years ended December 31,
---------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $71,399 $62,626 $63,716
- ----------------------------------------------------------------------------------------------------
Interest on investment securities:
U.S. Treasury and Federal Agency securities 18,122 21,260 23,272
States and political subdivisions 6,661 6,907 6,644
Other investments 574 488 1,178
- ----------------------------------------------------------------------------------------------------
Total interest on investment securities 25,357 28,655 31,094
- ----------------------------------------------------------------------------------------------------
Other interest income 1,143 743 847
- ----------------------------------------------------------------------------------------------------
Total interest income 97,899 92,024 95,657
- ----------------------------------------------------------------------------------------------------
Interest expense:
Interest bearing demand deposits 7,070 7,357 8,172
Savings deposits 8,127 8,584 9,917
Certificates of deposit 23,505 17,730 19,346
- ----------------------------------------------------------------------------------------------------
Total interest on deposits 38,702 33,671 37,435
Other borrowings 3,168 1,957 1,948
- ----------------------------------------------------------------------------------------------------
Total interest expense 41,870 35,628 39,383
- ----------------------------------------------------------------------------------------------------
Net interest income 56,029 56,396 56,274
Provision for possible loan losses (Note 8) 2,770 6,055 3,229
- ----------------------------------------------------------------------------------------------------
Net interest income after provision for possible loan losses 53,259 50,341 53,045
- ----------------------------------------------------------------------------------------------------
Other income:
Trust fees 4,716 4,425 4,160
Charge card discounts and fees 1,039 922 958
Service charges and other income 4,906 5,037 4,813
Net investment securities transaction gains 437 366 164
- ----------------------------------------------------------------------------------------------------
Total other income 11,098 10,750 10,095
- ----------------------------------------------------------------------------------------------------
Other expenses:
Salaries and wages 17,187 17,621 16,569
Pension and other employee benefits (Note 14) 4,417 4,073 3,886
Net occupancy expense (Note 9) 1,977 1,949 2,020
Equipment expense 2,461 2,381 2,418
Other operating expense (Note 15) 12,946 13,590 13,818
- -----------------------------------------------------------------------------------------------------
Total other expenses 38,988 39,614 38,711
- -----------------------------------------------------------------------------------------------------
Income before provision for income taxes 25,369 21,477 24,429
Provision for income taxes (Note 16) 7,180 5,780 6,587
- -----------------------------------------------------------------------------------------------------
Net Income $18,189 $15,697 $17,842
=====================================================================================================
Earnings per share of common stock: (Note 1)
Earnings per share $2.13 $1.81 $2.04
Preferred stock dividends and discount accretion $ 164 $ 183 $ 184
Average number of shares 8,470,328 8,590,878 8,689,499
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these financial statements.
9
<PAGE> 3
WESBANCO, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------
(in thousands, except for shares)
<TABLE>
<CAPTION>
For the years ended December 31, 1995, 1994 and 1993
---------------------------------------------------------------------------------------
Market Value Deferred
Adjustment on Benefits for
Shares Common Capital Retained Treasury Investments Directors &
Outstanding Stock Surplus Earnings Stock Available for Sale Employees Total
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1992 8,695,778 $18,147 $27,657 $102,429 $(221) _ $(560) $147,452
- ------------------------------------------------------------------------------------------------------------------------------
Net Income 17,842 17,842
Cash dividends:
Common ($.785 per share) (5,178) (5,178)
Common by pooled bank
prior to acquisition (1,393) (1,393)
Preferred by pooled bank
prior to acquisition (152) (152)
Accretion of preferred stock by pooled
bank prior to acquisition (32) (32)
Common stock issued through
dividend reinvestment plan by
pooled bank prior to acquisition 11,365 23 253 276
Net treasury shares purchased (35,000) (1,102) (1,102)
ESOP borrowing (422) (422)
Principal payment on ESOP debt 225 225
- --------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 8,672,143 18,170 27,910 113,516 (1,323) _ (757) 157,516
- --------------------------------------------------------------------------------------------------------------------------------
Net Income 15,697 15,697
Cash dividends:
Common ($.86 per share) (7,389) (7,389)
Preferred (151) (151)
Accretion of preferred stock (32) (32)
Treasury stock used for ESOP 2,000 (16) 63 47
Net treasury shares purchased
or retired (164,185) (83) (926) (3,475) (4,484)
ESOP borrowing (246) (246)
Principal payment on ESOP debt 154 154
Market value adjustment on
investments available for sale -
net of tax effect $(4,482) (4,482)
- --------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 8,509,958 18,087 26,968 121,641 (4,735) (4,482) (849) 156,630
- --------------------------------------------------------------------------------------------------------------------------------
Net Income 18,189 18,189
Cash dividends:
Common ($.96 per share) (8,139) (8,139)
Preferred (138) (138)
Accretion of preferred stock (26) (26)
Treasury stock used for ESOP 3,500 96 96
Net treasury shares purchased (128,597) (3,456) (3,456)
Redemption of preferred stock 111,111 (1,210) 3,057 1,847
ESOP borrowing (129) (129)
Principal payment on ESOP debt 200 200
Deferred benefits for directors (365) (365)
Market value adjustment on
investments available for sale -
net of tax effect 5,331 5,331
- --------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 8,495,972 $18,087 $25,758 $131,527 $(5,038) $849 $(1,143) $170,040
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
There was no activity, or outstanding balances in the Nonredeemable
Preferred Stock during the years ended December 31, 1995, 1994 and 1993.
See Note 17 for discussion on Redeemable Preferred Stock.
The accompanying Notes to Consolidated Financial Statements are an integral
part of these financial statements
10
<PAGE> 4
WESBANCO, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
- -----------------------------------------------------------------------------
Increase (Decrease) in Cash and Cash Equivalents (in thousands)
<TABLE>
<CAPTION>
For the years ended December 31,
--------------------------------
1995 1994 1993
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net Income $18,189 $15,697 $17,842
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation 2,130 2,033 1,930
Provision for possible loan losses 2,770 6,055 3,229
Investment amortization - net 3,276 5,094 5,612
Gains on sales of investment securities - net (437) (366) (164)
Deferred income taxes 185 (107) (141)
Other - net 269 (1) (142)
Increase or decrease in assets and liabilities:
Interest receivable 327 673 910
Other assets (6,069) (1,086) (412)
Interest payable 1,383 (92) (723)
Other liabilities (899) 232 (478)
- ---------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 21,124 28,132 27,463
- ---------------------------------------------------------------------------------------------------------------
Investing activities:
Investment securities held to maturity:
Proceeds from sales ---- ---- 5,596
Proceeds from maturities and calls 59,059 46,575 55,222
Payments for purchases (56,506) (97,306) (147,831)
Investment securities available for sale:
Proceeds from sales 59,291 67,002 31,981
Proceeds from maturities and calls 47,901 52,364 90,435
Payments for purchases (50,145) (64,917) (35,344)
Other investing activities:
Net increase in loans (76,690) (34,786) (37,950)
Net decrease in charge card loans 939 27 1,271
Purchases of premises and equipment - net (3,175) (1,519) (2,089)
- ---------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (19,326) (32,560) (38,709)
- ---------------------------------------------------------------------------------------------------------------
Financing activities:
Net increase (decrease) in certificates of deposit 38,732 20,840 (28,109)
Net increase (decrease) in demand deposits and savings accounts (32,478) (25,225) 45,890
Increase in federal funds purchased and repurchase agreements 4,707 14,524 721
Increase (decrease) in short-term borrowings (3,042) (6,010) 2,563
Net proceeds (payments) related to ESOP debt (71) 92 197
Dividends paid (8,022) (6,984) (6,279)
Purchases of treasury stock - net (3,456) (4,484) (1,102)
Other - net 57 33 (8)
- ---------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities (3,573) (7,214) 13,873
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (1,775) (11,642) 2,627
Cash and cash equivalents at beginning of year 65,013 76,655 74,028
- ---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $63,238 $65,013 $76,655
===============================================================================================================
</TABLE>
During 1995, 1994 and 1993, WesBanco paid $40,487, $35,720 and $40,106 in
interest on deposits and other borrowings and $7,515, $5,955 and $6,990 for
income taxes, respectively.
During 1995, there were 9,925 shares of preferred stock redeemed, of which
9,723 shares were exchanged for 111,111 shares of WesBanco common stock in a
non-cash transaction. The remaining 202 shares were redeemed for cash at
$190 per share and are included in other financing activities.
The accompanying Notes to Consolidated Financial Statements are an integral
part of these financial statements.
11
<PAGE> 5
WESBANCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
NOTE 1: ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
WesBanco, Inc. and its subsidiary banks provide banking and trust services
primarily in the West Virginia and Eastern Ohio markets. The significant
accounting principles employed in the preparation of the accompanying
consolidated financial statements are summarized below:
Principles of consolidation:
- ----------------------------
The Consolidated Financial Statements of WesBanco, Inc. (the "Corporation")
include the accounts of the Corporation and its wholly owned subsidiaries.
Material intercompany transactions and accounts have been eliminated.
Use of estimates:
- -----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Investment securities:
- ----------------------
Investments Held to Maturity:
Investment securities consisting principally of debt securities, which
are generally held to maturity, are stated at cost, adjusted for amortization
of premiums and accretion of discounts. These securities are purchased with
the intent and ability to hold until their maturity.
Investments Available for Sale:
U. S. Treasury and Agency debt securities with a maturity date extending
beyond three years of the purchase date, mortgage backed securities, corporate
securities, obligations of state and political subdivisions held by the parent
company and marketable equity securities are classified as available for sale.
These securities may be sold at any time based upon management's assessment of
changes in economic or financial market conditions, interest rate or prepayment
risks, liquidity considerations, and other factors. These securities are
stated at market value, with the market value adjustment, net of tax, reported
as a separate component of shareholders' equity. No permanent writedowns on
these securities have been required.
Investments Available for Trading:
The Corporation did not have a trading portfolio during either of the two
years ended December 31, 1995 and 1994.
Gains and Losses:
Net realized gains and losses on sale of investment securities are
included in the statement of income. The cost of these securities sold is
based on the specific identification method.
Amortization and Accretion:
Amortization of premiums and accretion of discounts are included in
interest on investment securities in the Consolidated Statement of Income.
Loans:
- ------
Interest is accrued as earned on loans except where doubt exists as to
collectability, in which case recognition of income is discontinued. Net loan
fees and deferrable costs are not material.
The Corporation adopted Financial Accounting Standard (FAS) No. 114 (as
amended by FAS No. 118), "Accounting by Creditors for Impairment of a Loan,"
on January 1, 1995. Under the new standard, a loan is considered impaired,
based on current information and events, if it is probable that the
Corporation will be unable to collect the scheduled payments of principal and
interest when due according to the contractual terms of the loan agreement.
Reserve for possible loan losses:
- ---------------------------------
The reserve for possible loan losses is maintained at a level considered
adequate by mnagement to provide for potential loan losses. The reserve is
increased by provisions charged to operating expenses and reduced by loan
losses net of recoveries. The amount of reserve is based on management's
evaluation of the loan portfolio, as well as prevailing and anticipated
economic conditions, past loan loss experience, current delinquency factors,
changes in the character of the loan portfolio, specific problem loans and
other relevant factors.
The reserve for possible loan losses related to loans that are identified
for evaluation, in accordance with FAS No. 114, is based on discounted cash
flows using the loan's initial effective interest rate or the fair value of
the collateral for certain collateral dependent loans. If the valuation is
less than the recorded value of the loan, an impairment reserve must be
established for the difference.
Bank premises and equipment:
- ----------------------------
Bank premises and equipment are stated at cost less accumulated
depreciation. Bank premises and equipment are depreciated over their
estimated useful lives using either the straight-line or an accelerated method.
Useful lives are revised when a change in life expectancy becomes apparent.
Maintenance and repairs are charged to expense and betterments are
capitalized. Gains and losses on bank premises and equipment retired or
otherwise disposed of are charged to expense when incurred.
12
<PAGE> 6
NOTE 1: ACCOUNTING POLICIES (CONTINUED)
- -------------------------------------------------------------------------------
Income taxes:
- -------------
Deferred tax assets and liabilities are recognized for the expected future
tax consequences attributable to temporary differences between the carrying
amounts of assets and liabilities and their tax bases. In addition, such
deferred tax asset and liability amounts are adjusted for the effects of
enacted changes in tax laws or rates.
Earnings per share:
Earnings per share are calculated based upon dividing net income, less
preferred stock dividends and accretion, by the weighted average number of
shares of common stock outstanding during the year.
Trust assets and income:
- ------------------------
Assets held by the subsidiary banks in fiduciary or agency capacities for
their customers are not included as assets in the accompanying Consolidated
Balance Sheet. Trust fees are reported on the cash basis of accounting in
accordance with customary banking practice. Reporting of trust income on an
accrual basis would not materially affect net income. Certain trust assets
are held on deposit at subsidiary banks.
Statement of cash flows:
- ------------------------
For the purpose of reporting cash flows, cash and cash equivalents
include cash and due from banks, and federal funds sold. Generally, federal
funds are sold for one day periods.
Reclassification:
- -----------------
Certain prior year amounts in loans and other assets have been reclassified
under FAS No. 114 for comparative purposes.
New accounting standards to be adopted:
- ---------------------------------------
FAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," requires an entity to review an asset
for impairment whenever circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is to be recognized when the sum of
expected future cash flows from the asset, on an undiscounted basis, is less
than the asset's carrying amount. The amount of the loss is measured based
on the fair value of the asset which contemplates the time value of money.
Subsequent restoration of previously recognized impairment losses is
prohibited. FAS No. 121 is effective for calendar year 1996 financial
statements. Management does not anticipate that the adoption of this
statement will have a material impact on the Corporation's consolidated
financial statements.
NOTE 2: ACQUISITIONS AND MERGERS
- -------------------------------------------------------------------------------
On February 28, 1994, WesBanco, Inc. acquired First Fidelity Bancorp, Inc.
which had total assets as of the acquisition date of approximately
$309,911,000. In accordance with terms of the merger, WesBanco issued
2,093,815 shares of common stock and 10,000 shares of redeemable preferred
stock. WesBanco retired and used as part of the transaction 40,000 shares of
treasury stock. The acquisition was accounted for as a pooling-of-interests
and accordingly, the consolidated financial statements include the accounts
of First Fidelity Bancorp for all periods presented. First Fidelity's
dividend reinvestment plan was replaced by the WesBanco plan following the
merger.
NOTE 3: RESTRICTED CASH BALANCES
- -------------------------------------------------------------------------------
Federal Reserve regulations require depository institutions to maintain
cash reserves with the Federal Reserve Bank. The average amounts of required
reserve balances were approximately $6,955,000 and $6,519,000 during 1995 and
1994, respectively.
NOTE 4: LOANS
- -------------------------------------------------------------------------------
The following is a summary of total loans:
(in thousands)
<TABLE>
<CAPTION>
December 31,
-----------------
1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Loans:
Commercial $172,270 $161,521
Real estate - construction 15,493 24,734
Real estate - mortgage 392,681 358,540
Installment 277,934 241,441
- -------------------------------------------------------------------------------
Total Loans $858,378 $786,236
===============================================================================
</TABLE>
13
<PAGE> 7
NOTE 4: LOANS (CONTINUED)
- -------------------------------------------------------------------------------
Most lending is with customers who are located within the state of West
Virginia and Eastern Ohio. There is no significant concentration of credit
risk by industry or by individual borrowers, no significant exposure to highly
leveraged loan transactions, nor any foreign loans. At December 31, 1995,
loans that are considered to be impaired under FAS No. 114 were $7,291,000
(of which $5,199,000 were on a nonaccrual basis). Included in this amount was
$1,999,000 of impaired loans for which the related reserve for possible loan
losses was $334,000 and $5,292,000 of impaired loans that, as a result of
collateral values, did not require a reserve for loan losses. The average
balance of impaired loans during the year ended December 31, 1995 was
approximately $6,773,000. For the purpose of this standard, impaired loans
include all nonperforming loans. For the period ended December 31, 1995, the
interest income recognized on impaired loans did not have a material effect
on the results of operations. Loans aggregating $8,183,000, were classified as
renegotiated or nonaccrual as of December 31, 1994.
Interest and fees on loans would have been increased by approximately
$565,000, $715,000 and $593,000 for the years 1995, 1994 and 1993,
respectively, if renegotiated and nonaccrual loans had earned their stated
interest for the entire year. The amount of interest included in net
interest income from renegotiated and nonaccrual loans was $142,000,
$284,000, and $629,000 for the years ended December 31, 1995, 1994 and 1993,
respectively.
The subsidiary banks, in the ordinary course of business, grant loans to
related parties at terms which do not vary from terms that would have been
required if the transactions had been with unrelated parties. Indebtedness of
related parties aggregated approximately $42,826,000, $42,925,000 and
$39,934,000 as of December 31, 1995, 1994 and 1993, respectively. Activity
for the year ended December 31, 1995 is summarized as follows:
(in thousands)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
<S> <C>
Balance, beginning of year $42,925
Additions 33,070
Cash payments and other reductions (33,169)
- ---------------------------------------------------------------------
Balance, end of year $42,826
=====================================================================
</TABLE>
NOTE 5: INVESTMENT SECURITIES
- -----------------------------------------------------------------------------
Effective January 1, 1994, the Corporation adopted the provisions of FAS
No. 115. Under the new rules, debt securities for which the company has both
the positive intent and ability to hold to maturity are carried at amortized
cost. Debt securities that the company does not have the positive intent and
ability to hold to maturity and all marketable equity securities are classified
as available for sale and carried at fair value. The market value adjustment
on securities classified as available for sale is carried as a separate
component of shareholders' equity. The following tables summarize amortized
cost and fair values of held to maturity and available for sale securities:
(in thousands)
<TABLE>
<CAPTION>
Held to Maturity
-------------------------------------------------------------------------------------------
December 31, 1995 December 31, 1994
-------------------------------------------- --------------------------------------------
Gross Gross Estimated Gross Gross Estimated
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
Cost Gains Losses Value Cost Gains Losses Value
- --------------------------------------------------------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and
Federal Agency
Securities $133,888 $1,081 $(180) $134,789 $150,197 $ 11 $(4,102) $146,106
Obligations of
states and political
subdivisions 115,770 2,156 (242) 117,684 122,716 520 (3,657) 119,579
Other debt
securities 1,358 --- --- 1,358 1,260 --- --- 1,260
- ---------------------------------------------------------------- --------------------------------------------
Totals $251,016 $3,237 $(422) $253,831 $274,173 $531 $(7,759) $266,945
================================================================ ============================================
</TABLE>
14
<PAGE> 8
NOTE 5: INVESTMENT SECURITIES (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Available for Sale
-----------------------------------------------------------------------------------------------
December 31, 1995 December 31, 1994
---------------------------------------------- ----------------------------------------------
Gross Gross Estimated Gross Gross Estimated
Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
Cost Gains Losses Value Cost Gains Losses Value
---------------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and
Federal Agency
Securities $156,241 $1,806 $(542) $157,505 $200,440 $285 $(7,611) $193,114
Obligations of
states and political
subdivisions 5,698 13 (44) 5,667 --- --- --- ---
US Corporate
securities 4 --- --- 4 919 1 (5) 915
Mortgage-backed
securities 6,636 19 (45) 6,610 8,113 26 (351) 7,788
Other debt
securities 24 --- --- 24 24 --- --- 24
- ----------------------------------------------------------------- ----------------------------------------------
Total debt
securities 168,603 1,838 (631) 169,810 209,496 312 (7,967) 201,841
Equity securities 2,142 190 (5) 2,327 551 317 (4) 864
- ----------------------------------------------------------------- ----------------------------------------------
Totals $170,745 $2,028 $(636) $172,137 $210,047 $629 $(7,971) $202,705
================================================================= ==============================================
</TABLE>
The following table shows amortized cost and estimated fair value of
securities by maturity at December 31, 1995:
<TABLE>
<CAPTION>
December 31, 1995
-------------------------------------------------
Held to Maturity Available for Sale
--------------------- -----------------------
Estimated Estimated
Amortized Fair Amortized Fair
(in thousands) Cost Value Cost Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Within one year $ 81,126 $81,330 $ 33,053 $ 33,112
After one year, but within five 119,322 121,076 116,873 117,899
After five years, but within ten 44,360 45,173 17,847 17,991
After ten years 6,208 6,252 2,972 3,135
- ----------------------------------------------------------------------------------------------------------------
Total $251,016 $253,831 $170,745 $172,137
================================================================================================================
</TABLE>
Mortgage-backed securities are assigned to maturity categories based on
estimated average lives. Available for sale securities in the after 10
year category include securities with no stated maturity. Securities with
prepayment provisions are categorized based on contractual maturity.
In accordance with the FASB's Special Report, "A Guide to Implementation
of Statement 115 on Accounting for Certain Investments in Debt and Equity
Securities," on December 29, 1995 obligations of states and political
subdivisions held by the Parent Company with a book value of $5,698,000 and a
market value of $5,667,000 were transferred from the held to maturity category
to the available for sale category.
Investment securities with par values aggregating $155,105,000 at
December 31, 1995 and $142,077,000 at December 31, 1994 were pledged to secure
public and trust funds. Gross gains of $513,000, $403,000 and $252,000 and
gross losses of $76,000, $37,000 and $88,000 were realized for the years ended
December 31, 1995, 1994 and 1993, respectively.
NOTE 6: TRANSACTIONS WITH RELATED PARTIES
- -------------------------------------------------------------------------------
Some officers and directors (including their affiliates, families and
entities in which they are principal owners) of the Corporation and its
subsidiaries are customers of those subsidiaries and have had, and are
expected to have, transactions with the subsidiaries in the ordinary course
of business. In addition, some officers and directors are also officers and
directors of corporations which are customers of the banks and have had, and
are expected to have, transactions with the banks in the ordinary course of
business. In the opinion of management, such transactions are consistent with
prudent banking practices and are within applicable banking regulations.
15
<PAGE> 9
NOTE 6: TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
- -------------------------------------------------------------------------------
The amount of transactions with related parties including loans and legal
fees aggregated approximately $43,125,000 at December 31, 1995. These related
party transactions equal 25% of shareholders' equity at December 31, 1995.
NOTE 7: FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
- -------------------------------------------------------------------------------
Individual banks within the Corporation incur off-balance-sheet risks in
the normal course of business in order to meet financing needs of their
customers. These financial instruments include commitments to extend credit
and standby letters of credit. Those instruments involve, to varying degrees,
elements of credit and interest rate risk in excess of the amount recognized
in the financial statements.
In the normal course of business, there are outstanding various
commitments to extend credit approximating $63,307,000 and standby letters of
credit of $10,196,000 as of December 31, 1995. The banks' exposure to credit
loss in the event of nonperformance by the other party to the financial
instrument for commitments to extend credit and standby letters of credit
is represented by the contractual amount of those instruments. The banks use
the same credit and collateral policies in making commitments and conditional
obligations as for all other lending. Collateral which secures these types of
commitments is the same type as collateral for other types of lending, such as
accounts receivable, inventory and fixed assets.
Commitments to extend credit are commitments to lend to a customer as
long as there is no violation of any condition established in the loan
agreement. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements.
The banks evaluate each customer's credit worthiness on a case-by-case basis.
Standby letters of credit are conditional commitments issued by the banks
to guarantee the performance of a customer to a third party. Those guarantees
are primarily issued to support public and private borrowing arrangements,
including normal business activities, bond financing and similar transactions.
The credit risk involved in issuing letters of credit is essentially the same
as that involved in extending loans to customers. Collateral securing these
types of transactions is similar to collateral securing the banks' commercial
loans.
NOTE 8: RESERVE FOR POSSIBLE LOAN LOSSES
- --------------------------------------------------------------------------------
The activity in the reserve for possible loan losses is as follows:
(in thousands)
<TABLE>
<CAPTION>
For the years ended December 31,
-----------------------------------
1995 1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year $12,317 $11,851 $10,638
Provision 2,770 6,055 3,229
Loan recoveries 578 451 609
Loan losses (2,918) (6,040) (2,625)
- --------------------------------------------------------------------------------------
Balance, end of year $12,747 $12,317 $11,851
======================================================================================
</TABLE>
NOTE 9: BANK PREMISES AND EQUIPMENT
- ------------------------------------------------------------------------------
Bank premises and equipment include: (in thousands)
<TABLE>
<CAPTION>
December 31,
Estimated ---------------------
useful life 1995 1994
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Land and improvements (3-10 years) $ 5,930 $ 6,053
Buildings and improvements (4-50 years) 24,708 24,112
Furniture and equipment (2-25 years) 17,685 15,983
- --------------------------------------------------------------------------------------
48,323 46,148
Less - Accumulated depreciation (25,297) (24,274)
- --------------------------------------------------------------------------------------
Total $23,026 $21,874
======================================================================================
</TABLE>
16
<PAGE> 10
NOTE 10: OTHER ASSETS
- -------------------------------------------------------------------------------
Other Assets includes property acquired through a foreclosure proceeding,
acceptance of a deed-in-lieu of foreclosure, and loans classified as
in-substance foreclosures. In accordance with FAS No. 114, a loan is
classified as an in-substance foreclosure when the Corporation has taken
possession of the collateral. Loans previously classified as in-substance
foreclosures, which the Corporation had not taken possession of the
collateral, have been reclassified to loans. This reclassification did not
significantly impact the Corporation's financial condition. Other Real Estate
Owned, included in other assets, is carried at the lower of cost or fair
market value.
NOTE 11: CERTIFICATES OF DEPOSIT
- -------------------------------------------------------------------------------
Maturities of certificates of deposit in denominations of $100,000 or more is
as follows: (in thousands)
<TABLE>
<CAPTION>
December 31,
-----------------------
Maturity 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Under three months $25,703 $24,890
Three to six months 6,021 8,545
Six to twelve months 5,839 5,637
Over twelve months 34,090 21,678
- -------------------------------------------------------------------------------
Total $71,653 $60,750
===============================================================================
</TABLE>
Interest expense on certificates of deposit of $100,000 or more was
approximately $3,829,000 in 1995, $2,387,000 in 1994 and $2,378,000 in 1993.
NOTE 12: ESOP AND LONG TERM BORROWINGS
- -------------------------------------------------------------------------------
The Corporation has a qualified noncontributory Employee Stock Ownership
Plan (ESOP) and Trust Agreement for the purpose of investing in the common
stock of WesBanco on behalf of its employees. Substantially all employees were
included in the ESOP plan as of January 1, 1995. Currently, the ESOP Trust holds
105,936 shares of WesBanco common stock. Approximately 75,103 shares of
stock were allocated to specific employee accounts as of December 31, 1995.
During November 1995, the WesBanco ESOP Trust renegotiated its existing
line of credit with an affiliated lender. Conditions in the loan agreement
remain the same, providing for a line of credit in the aggregate amount of
$1,000,000 to facilitate purchases of WesBanco common stock in the open
market. The ESOP Trust utilized the line of credit during the year to
purchase an additional 5,000 shares of stock for $128,750, pledging those
shares as collateral. The loan bears interest at a rate equal to the
lender's base rate and requires annual repayments of principal equal to 20%
of the balance at January 1 of each year. The loan has a final maturity date
of 5 years from date of inception. The $1,000,000 revolving line of credit
has a balance of $777,000 and $849,000 as of December 31, 1995 and 1994,
respectively.
Total contributions to the ESOP during 1995 were $350,012, which included
cash contributions of $254,200 and an additional stock contribution valued at
$95,812. Contributions during 1994 and 1993 were $231,956 and $246,000,
respectively.
Effective January 1, 1996, WesBanco expanded the existing ESOP to include
401(k) provisions. Under the 401(k) provisions, substantially all employees
are eligible to participate. The Corporation makes matching contributions to
the 401(k), up to a maximum of 1.5% of employees' compensation, subject to
regulatory limitations.
NOTE 13: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
- -------------------------------------------------------------------------------
Fair value estimates of financial instruments are based on present value
of expected future cash flows, quoted market prices of similar financial
instruments, if available, and other valuation techniques. These valuations are
significantly affected by the discount rates, cash flow assumptions, and risk
assumptions used. Therefore, the fair value estimates may not be substantiated
by comparison to independent markets and are not intended to reflect the
proceeds that may be realizable in an immediate settlement of the instruments.
The aggregate fair value of amounts presented do not represent the
underlying value of the Corporation. Management does not have the intention
to dispose of a significant portion of its financial instruments and,
therefore, the unrealized gains or losses should not be interpreted as a
forecast of future earnings and cash flows.
17
<PAGE> 11
NOTE 13: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
- -------------------------------------------------------------------------------
The following table represents the estimates of fair value of financial
instruments: (in thousands)
<TABLE>
<CAPTION>
December 31,
------------------------------------------
1995 1994
------------------ -------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Financial assets:
Cash and short-term investments $ 63,539 $ 63,539 $ 65,310 $ 65,310
Investment securities - held to maturity 251,016 253,831 274,173 266,945
Investment securities - available for sale 172,137 172,137 202,705 202,705
Net loans 837,821 848,611 764,801 755,212
Financial liabilities:
Deposits 1,115,473 1,120,914 1,109,219 1,110,558
Short-term borrowings 71,859 71,859 70,194 70,194
Redeemable preferred stock --- --- 1,860 2,627
=========================================================================================
</TABLE>
The following methods and assumptions are used to estimate the fair value of
like kinds of financial instruments:
Cash and Short-Term Investments:
The carrying amount for cash and short-term investments is a reasonable
estimate of fair value. Short-term investments consist of federal funds sold.
Investment Securities:
Fair values for investment securities are based on quoted market prices,
if available. If market prices are not available, then quoted market prices of
similar instruments are used.
Net Loans:
Fair values for loans with interest rates that fluctuate as current rates
change are generally valued at carrying amounts. The fair values for
residential mortgage loans are based on quoted market prices of securitized
financial instruments, adjusted for remaining maturity and differences in
loan characteristics. Fair values of commercial real estate, construction and
consumer loans are based on a discounted value of the estimated future cash
flows expected to be received. The current interest rates applied in the
discounted cash flow method reflect rates used to price new loans of similar
type, adjusted for relative risk and remaining maturity. The fair value of
credit cards is estimated based on the anticipated average cost of soliciting
a new account and the present credit quality of the outstanding balances. For
nonaccrual loans, fair value is estimated by discounting expected future
principal cash flows only.
Deposits:
The carrying amount is considered a reasonable estimate of fair value for
demand and savings deposits and other variable rate deposit accounts. The fair
value of fixed maturity certificates of deposit is estimated by a discounted
cash flow method using the rates currently offered for deposits of similar
remaining maturities.
Short-Term Borrowings:
For short-term borrowings, which include federal funds purchased,
repurchase agreements, and other short-term borrowings, the carrying amount
is a reasonable approximation of fair value.
Redeemable Preferred Stock:
The fair value of redeemable preferred stock is estimated using discounted
cash flow analyses based on estimated incremental borrowing rates for similar
types of arrangements.
Off-Balance Sheet Instruments:
The fair value of commitments is estimated using the fees currently
charged to enter into similar agreements, taking into account the remaining
terms of the agreements and the present credit standing of the counterparties.
The amount of fees currently charged on commitments is determined to be
insignificant and therefore the fair value and carrying value of off-balance
sheet instruments are not shown.
NOTE 14: RETIREMENT AND BENEFIT PLANS
- -------------------------------------------------------------------------------
At December 31, 1995, substantially all employees are participants in the
WesBanco defined benefit pension plan. The plan covers those employees who
satisfy minimum age and length of service requirements. Benefits of the
WesBanco defined benefit plan are generally based on the years of service and
the employee's compensation during the last five years of employment. The
WesBanco plan's funding policy has been to contribute annually the maximum
amount that can be deducted for federal income tax purposes. Contributions
are intended to provide not only for benefits attributed to service to date,
but also for those expected to be earned in the future.
18
<PAGE> 12
NOTE 14: RETIREMENT AND BENEFIT PLANS (CONTINUED)
- -------------------------------------------------------------------------------
During 1995, all assets and liabilities of the First Fidelity Bancorp
defined benefit pension plan were merged into the WesBanco plan. Prior to the
merger, First Fidelity Bancorp's defined benefit plan formula used length of
service and the employee's compensation to determine benefits. Contributions
provided for benefits attributed to employee service to date and for those
benefits expected to be earned in the future.
Net periodic pension cost for the defined benefit plans in 1995, 1994 and
1993 include the following components:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned during year $ 875 $ 931 $ 799
Interest cost on projected benefit obligation 1,275 1,149 1,012
Actual return on plan assets (3,455) 374 (1,606)
Net amortization and deferral 2,277 (1,548) 577
- --------------------------------------------------------------------------------------
Net periodic pension cost $ 972 $ 906 $ 782
======================================================================================
</TABLE>
The following table sets forth the defined benefit pension plans' funded
status and the asset reflected in the Consolidated Balance Sheet at December 31,
1995 and 1994:
<TABLE>
<CAPTION>
December 31,
-------------------
(in thousands) 1995 1994
- --------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested benefit obligation $ 10,530 $ 10,141
Accumulated benefit obligation 11,948 11,425
======================================================================================
Projected benefit obligation $(14,215) $(15,884)
Plan assets at current market value, primarily listed
stocks, bonds and cash equivalents 18,296 14,779
- --------------------------------------------------------------------------------------
Plan assets in excess of (less than) projected benefit obligation 4,081 (1,105)
Unrecognized prior service cost (2,376) 1,024
Unrecognized net loss 192 995
Unrecognized obligation (145) (156)
- --------------------------------------------------------------------------------------
Net pension asset $ 1,752 $ 758
======================================================================================
</TABLE>
<TABLE>
<CAPTION> December 31,
------------------
1995 1994(1)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Assumptions used in the accounting for the WesBanco plan were:
Weighted average discount rates 7.5% 8.0%
Rates of increase in compensation levels 4.5% 5.0%
Weighted average expected long-term return on assets 8.75% 8.0%
- --------------------------------------------------------------------------------------
</TABLE>
(1) Assumptions used in First Fidelity Bancorp's plan were 7%, 4%, and 8.5%
for discount rates, increase in compensation levels and expected long-term
return on assets, respectively.
WesBanco currently provides a death benefit and a contributory health
insurance plan for all retirees. WesBanco's contribution toward health
insurance is a fixed amount which may be changed at its sole discretion.
During 1995, the Corporation increased its health insurance benefit from $70
to $90 per month, or 28.6%, and its death benefit from $5,000 to $7,500, or 50%.
Effective January 1, 1995, First Fidelity Bancorp was included in the
WesBanco postretirement medical and death benefit programs. First Fidelity
had no significant nonpension postretirement benefits for the years 1994 and
1993.
19
<PAGE> 13
NOTE 14: RETIREMENT AND BENEFIT PLANS (CONTINUED)
- -------------------------------------------------------------------------------
Net periodic postretirement benefit costs other than pension costs in 1995,
1994 and 1993 include the following components:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost _ benefits earned during year $ 71 $ 49 $ 42
Interest cost on projected benefit obligation 173 92 94
Prior service cost 57 --- ---
Net amortization and deferral --- 6 5
- ------------------------------------------------------------------------------------
Net periodic postretirement benefit cost other than pensions $301 $147 $141
====================================================================================
</TABLE>
The following table sets forth the liability reflected in the Consolidated
Balance Sheet at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
December 31,
-------------------
(in thousands) 1995 1994
- -----------------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $1,019 $ 781
Fully eligible active plan participants 1,468 481
- -----------------------------------------------------------------------------------
Total 2,487 1,262
Unrecognized prior service cost (918) ---
Unrecognized net loss (150) (69)
- -----------------------------------------------------------------------------------
Net postretirement benefit liability $1,419 $1,193
===================================================================================
Assumptions used in the accounting were:
Weighted average discount rate 7.5% 8.0%
===================================================================================
</TABLE>
Postretirement benefits are funded as incurred resulting in cash payments
of approximately $75,000, $51,000 and $50,000 for the years ended December 31,
1995, 1994 and 1993, respectively.
The Corporation's portion of the cost of health care benefits is expected
to increase during 1996. An assumption of a 1% per year increase in the
benefit level would increase the expense in health care benefits by $79,829 or
28% for the year ended 1995 and increase the accumulated postretirement
benefit obligation by $445,552 or 21% as of December 31, 1995.
NOTE 15: OTHER OPERATING EXPENSE
- -------------------------------------------------------------------------------
Other operating expenses for the years 1995, 1994 and 1993 include:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Customer and office supplies $ 1,170 $ 1,392 $ 1,319
Postage and freight 1,047 1,032 1,003
Legal and accounting fees 998 1,124 1,036
Marketing media 1,303 1,125 1,133
Miscellaneous taxes 1,787 1,735 1,687
FDIC Insurance 1,294 2,524 2,502
Other 5,347 4,658 5,138
- -------------------------------------------------------------------------------
Total $12,946 $13,590 $13,818
===============================================================================
</TABLE>
NOTE 16: INCOME TAXES
- -------------------------------------------------------------------------------
Pre-tax income from operations for the years ended December 31, 1995, 1994
and 1993 was $25,369,000, $21,477,000 and $24,429,000, respectively. A
reconciliation of the federal statutory tax rate to the reported effective tax
rate is as follows:
<TABLE>
<CAPTION>
For the years ended December 31,
--------------------------------
1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory tax rate 35% 35% 35%
Tax-exempt interest income from securities of
states and political subdivisions (8) (11) (10)
State income taxes 3 3 3
Other - net (2) --- (1)
- --------------------------------------------------------------------------------
Effective tax rate 28% 27% 27%
================================================================================
</TABLE>
20
<PAGE> 14
NOTE 16: INCOME TAXES (CONTINUED)
- --------------------------------------------------------------------------------
The provision for income taxes in the Consolidated Statement of Income
consists of the following: (in thousands)
<TABLE>
<CAPTION>
For the years ended December 31,
-----------------------------------
1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Current - Federal $5,885 $5,046 $5,758
State 1,110 841 970
Deferred - Federal 187 (106) (251)
State (2) (1) 110
- --------------------------------------------------------------------------------
Total $7,180 $5,780 $6,587
================================================================================
Tax expense applicable to securities transactions $ 174 $ 142 $ 64
================================================================================
</TABLE>
The Corporation's Federal and State income tax returns have been examined
through 1990 with no significant adjustments proposed by the Internal Revenue
Service or the State Tax Department.
Deferred tax assets and liabilities are comprised of the following at
December 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
December 31,
-------------------------
(in thousands) 1995 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets:
Reserve for possible loan losses $4,433 $4,009 $3,720
Tax effect of market value adjustment on
investment securities available for sale --- 2,860 ---
Postretirement and pension expense --- 238 583
Deferred compensation 355 419 250
Other 33 52 64
- ---------------------------------------------------------------------------------------
Gross deferred tax assets 4,821 7,578 4,617
- ---------------------------------------------------------------------------------------
Deferred tax liabilities:
Tax effect of market value adjustment on
investment securities available for sale 542 --- ---
Depreciation 991 860 849
Purchase accounting adjustments 167 161 152
Accretion on investments 136 82 82
Postretirement and pension expense 76 --- ---
Other 32 11 37
- ---------------------------------------------------------------------------------------
Gross deferred tax liabilities 1,944 1,114 1,120
- ---------------------------------------------------------------------------------------
Deferred tax asset valuation allowance --- --- ---
- ---------------------------------------------------------------------------------------
Net deferred tax assets $2,877 $6,464 $3,497
=======================================================================================
</TABLE>
NOTE 17: REDEEMABLE PREFERRED STOCK
- -------------------------------------------------------------------------------
On February 28, 1994, in connection with the acquisition of First Fidelity
Bancorp, Inc., WesBanco issued 10,000 shares of redeemable preferred stock.
During 1994, 75 shares were purchased and retired.
Effective November 15, 1995, WesBanco redeemed its Series A 8% Cumulative
Preferred Stock. The holders of the preferred stock had the right to elect to
convert the preferred stock to common stock, $2.0833 par value, at the
conversion ratio of 11.43 shares of common stock for each share of preferred
stock or cash in the amount of $190 per share. Periodic accretion using the
straight-line method increased the value of the stock to the redemption price
of $190 per share. The accretion was charged against retained earnings. The
holders of 9,723 shares elected to convert their preferred shares to common
shares resulting in the issuance of 111,111 shares held in treasury. A total
of 202 shares were redeemed for cash.
21
<PAGE> 15
NOTE 18: CONDENSED PARENT COMPANY FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Presented below are the condensed Balance Sheet, Statement of Income and
Statement of Cash Flows for the Parent Company: (in thousands)
<TABLE>
<CAPTION>
BALANCE SHEET
December 31,
--------------------
1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash $ 2,543 $ 1
Investment in subsidiary banks (at equity in net assets) 152,843 150,008
Investment securities:
Held to maturity (market values of $0 and $6,603, respectively) --- 6,795
Available for sale carried at market value 7,994 2,621
Dividends receivable 9,750 2,000
Other assets 205 151
- ------------------------------------------------------------------------------------------
TOTAL ASSETS $173,335 $161,576
==========================================================================================
LIABILITIES
Long-term borrowings (Note 12) $ 777 $ 849
Other liabilities 2,518 2,237
- ------------------------------------------------------------------------------------------
TOTAL LIABILITIES 3,295 3,086
REDEEMABLE PREFERRED STOCK --- 1,860
TOTAL SHAREHOLDERS' EQUITY 170,040 156,630
- ------------------------------------------------------------------------------------------
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND
SHAREHOLDERS' EQUITY $173,335 $161,576
==========================================================================================
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF INCOME
For the years ended December 31,
---------------------------------
1995 1994 1993
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME:
Dividends from subsidiary banks $20,500 $13,550 $13,464
Income from investments 361 273 134
Other income 312 22 2
- -------------------------------------------------------------------------------------------
TOTAL INCOME 21,173 13,845 13,600
- -------------------------------------------------------------------------------------------
TOTAL EXPENSES 809 842 719
- -------------------------------------------------------------------------------------------
Income before income tax benefit and undistributed
net income of subsidiary banks 20,364 13,003 12,881
Income tax benefit 145 303 396
- -------------------------------------------------------------------------------------------
Income before undistributed net income of subsidiary banks 20,509 13,306 13,277
Undistributed net income (excess dividends) of subsidiary banks (2,320) 2,391 4,565
- -------------------------------------------------------------------------------------------
NET INCOME $18,189 $15,697 $17,842
===========================================================================================
</TABLE>
22
<PAGE> 16
NOTE 18: CONDENSED PARENT COMPANY FINANCIAL STATEMENTS (CONTINUED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
For the years ended December 31,
-----------------------------------
1995 1994 1993
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities:
Net Income $18,189 $15,697 $17,842
Undistributed (net income) excess dividends of subsidiary banks 2,320 (2,391) (4,565)
Increase in other assets (7,795) (154) (425)
Other-net (163) (7) (242)
- ------------------------------------------------------------------------------------------------
Net cash provided by operating activities 12,551 13,145 12,610
- ------------------------------------------------------------------------------------------------
Investing activities:
Investments available for sale:
Proceeds from sales 2,267 31 1,001
Proceeds from maturities and calls 852 5,983 3,992
Payments for purchases (1,671) (6,835) (6,072)
Investments held to maturity:
Proceeds from maturities and calls 1,883 314 1,053
Payments for purchases (1,848) (4,471) (2,461)
- ------------------------------------------------------------------------------------------------
Net cash provided (used) by investing activities 1,483 (4,978) (2,487)
- ------------------------------------------------------------------------------------------------
Financing activities:
Principal payments on ESOP related debt (200) (154) (225)
Proceeds from ESOP related borrowings 129 246 422
Purchases of treasury stock - net (3,456) (4,484) (1,102)
Dividends paid (8,022) (6,984) (6,279)
Other 57 33 (292)
- ------------------------------------------------------------------------------------------------
Net cash used by financing activities (11,492) (11,343) (7,476)
- ------------------------------------------------------------------------------------------------
Net increase (decrease) in cash 2,542 (3,176) 2,647
Cash at beginning of year 1 3,177 530
- ------------------------------------------------------------------------------------------------
Cash at end of year $ 2,543 $ 1 $ 3,177
================================================================================================
</TABLE>
During 1995 there were 9,925 shares of Preferred Stock redeemed. Of these
shares, 9,723 shares were exchanged for 111,111 shares of WesBanco common
stock in a non-cash transaction. The remaining 202 shares were redeemed for
cash at $190 per share and are included in other financing activities.
The operations of the subsidiary banks are subject to Federal and state
statutes which limit the banks' ability to pay dividends or otherwise transfer
funds to the Parent Company. At December 31, 1995 the banks, without prior
approval from the regulators, could have distributed dividends of approximately
$5,081,000.
NOTE 19: SUBSEQUENT EVENT - AGREEMENT TO MERGE
- -------------------------------------------------------------------------------
On February 9, 1996, WesBanco, Inc. announced the signing of a definitive
Agreement and Plan of Merger providing for the merger of Bank of Weirton with
WesBanco Bank Wheeling, an affiliate of WesBanco, Inc. Under the terms of the
definitive Agreement and Plan of Merger, WesBanco will exchange 130 shares of
WesBanco's common stock for each share of Weirton's common stock outstanding in
a tax free exchange. A total of 1,690,000 common shares will be issued in the
transaction. The merger, which is based on a fixed exchange ratio, will be
accounted for as a pooling-of-interests.
The transaction, which is subject to, among other things, approval by the
appropriate regulatory authorities and the stockholders of Bank of Weirton, is
expected to be completed during the third quarter of 1996.
23
<PAGE> 17
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
The financial statements and the information pertaining to those
statements are the responsibility of management. The financial statements
have been prepared in conformity with generally accepted accounting
principles, applied on a consistent basis.
The accounting systems of the Corporation and its subsidiaries include
internal controls and procedures which provide reasonable assurance as to the
reliability of the financial records. Internal control systems are generally
supported by written policies and procedures. The internal auditing staff
systematically performs audits of operations, reviews procedures, monitors
adherence to bank policies and submits written audit reports to the Audit
Committee. The Audit Committee of the Board of Directors is composed of only
outside directors. The Audit Committee meets regularly with management,
internal audit and our independent accountants to review accounting, auditing
and financial matters. The internal auditors, Federal and State examiners,
and Price Waterhouse LLP have full access to the Audit Committee to discuss
any appropriate matters.
Independent accountants provide an objective review of management's
discharge of its financial responsibilities relating to the preparation of the
financial statements. The independent accountant's report is based on an audit
in accordance with generally accepted auditing standards. This report
expresses an informed judgement as to whether management's financial
statements present fairly, in conformity with generally accepted accounting
principles, the Corporation's financial position, results of operations and
cash flows.
[Price Waterhouse LLP Logo]
REPORT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF WESBANCO, INC.
In our opinion, based upon our audits and the report of other auditors,
the accompanying consolidated balance sheets and the related consolidated
statements of income, of changes in shareholders' equity and of cash flows
present fairly, in all material respects, the financial position of WesBanco,
Inc., and its subsidiaries (the Corporation) at December 31, 1995, and 1994,
and the results of its operations and its cash flows for each of the 3 years
in the period ended December 31, 1995, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
the Corporation's management; our responsibility is to express an opinion on
these financial statements based on our audits. We did not audit the financial
statements of First Fidelity Bancorp, Inc. for 1993, which statements reflect
net interest income of $13,913,000 for the year ended December 31, 1993.
Those statements were audited by other auditors whose report thereon has been
furnished to us, and our opinion expressed herein, insofar as it relates to
the amounts included for First Fidelity Bancorp, Inc., for 1993, is based
solely on the report of the other auditors. We conducted our audits of the
consolidated statements in accordance with generally accepted auditing
standards, which require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits and the report of other auditors provide a reasonable
basis for the opinion expressed above.
As discussed in Note 1 and Note 5, the Corporation adopted Statement of
Financial Accounting Standards (SFAS) No. 114, (as amended by SFAS No. 118),
"Accounting by Creditors for Impairment of a Loan," and SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," during 1995
and 1994, respectively.
/s/ Price Waterhouse LLP
600 Grant Street
Pittsburgh, Pennsylvania 15219
January 25, 1996, except as to Note 19, which is as of February 9, 1996
24
<PAGE> 18
WESBANCO, INC.
CONDENSED QUARTERLY STATEMENT OF INCOME
- -----------------------------------------------------------------------------
(in thousands, except for earnings per share)
<TABLE>
<CAPTION>
1995 Quarter ended
--------------------------------------------------------
Annual
March 31 June 30 September 30 December 31 Total
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest income $23,612 $24,402 $24,580 $25,305 $97,899
Interest expense 9,883 10,369 10,583 11,035 41,870
- --------------------------------------------------------------------------------------------------
Net interest income 13,729 14,033 13,997 14,270 56,029
Provision for possible loan losses 377 467 829 1,097 2,770
- --------------------------------------------------------------------------------------------------
Net interest income after provision
for possible loan losses 13,352 13,566 13,168 13,173 53,259
Other income 2,860 2,928 2,709 2,601 11,098
Other expenses 9,591 9,850 9,516 10,031 38,988
- --------------------------------------------------------------------------------------------------
Income before income taxes 6,621 6,644 6,361 5,743 25,369
Provision for income taxes 1,963 1,887 1,818 1,512 7,180
- --------------------------------------------------------------------------------------------------
Net Income $ 4,658 $ 4,757 $ 4,543 $ 4,231 $18,189
==================================================================================================
Earnings per share of common stock $ .54 $ .56 $ .53 $ .50 $ 2.13
==================================================================================================
</TABLE>
<TABLE>
<CAPTION>
1994 Quarter ended
----------------------------------------------------------
Annual
March 31 June 30 September 30 December 31 Total
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest income $22,557 $23,070 $23,110 $23,287 $92,024
Interest expense 8,684 8,741 8,884 9,319 35,628
- ---------------------------------------------------------------------------------------------------
Net interest income 13,873 14,329 14,226 13,968 56,396
Provision for possible loan losses 706 429 4,377 543 6,055
- ---------------------------------------------------------------------------------------------------
Net interest income after provision
for possible loan losses 13,167 13,900 9,849 13,425 50,341
Other income 2,865 2,498 2,631 2,756 10,750
Other expenses 9,515 9,781 10,001 10,317 39,614
- ---------------------------------------------------------------------------------------------------
Income before income taxes 6,517 6,617 2,479 5,864 21,477
Provision for income taxes 1,881 1,934 390 1,575 5,780
- ---------------------------------------------------------------------------------------------------
Net Income $ 4,636 $ 4,683 $ 2,089 $ 4,289 $15,697
===================================================================================================
Earnings per share of common stock $ .53 $ .54 $ .24 $ .50 $ 1.81
===================================================================================================
</TABLE>
25
<PAGE> 19
WESBANCO, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
Management's discussion and analysis represents an overview of the
financial condition and results of operations of WesBanco, Inc. This
discussion and analysis should be read in conjunction with the Consolidated
Financial Statements and Notes thereto. Following is the five year Selected
Financial Summary.(1)
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------------
(in thousands, except for share and per share amounts) 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash dividends declared(2) $ .96 $ .86 $ .785 $ .70 $ .675
Book value(2) 20.01 18.41 18.16 16.96 16.22
Average common shares outstanding(2) 8,470,328 8,590,878 8,689,499 8,707,197 8,704,537
Selected Balance Sheet Information:
Total Investments $ 423,153 $ 476,878 $ 492,667 $ 498,359 $ 410,182
Net Loans 837,821 764,801 736,055 701,967 678,119
Total Assets 1,371,793 1,350,968 1,346,822 1,316,279 1,269,304
Total Deposits 1,115,473 1,109,219 1,113,604 1,095,822 1,057,243
Total Shareholders' Equity 170,040 156,630 157,516 147,452 137,848
Selected Ratios:
Return on Average Assets 1.35% 1.17% 1.34% 1.22% 1.16%
Return on Average Equity 11.12 9.99 11.70 11.13 10.83
Dividend Payout Ratio 44.75 47.07 36.83 36.72 34.90
Average Equity to Average Assets 12.15 11.72 11.43 10.98 10.68
</TABLE>
<TABLE>
<CAPTION>
For the years ended December 31,
-------------------------------------------------------------
1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Summary Statement of Income:
Interest income $ 97,899 $ 92,024 $ 95,657 $ 101,770 $ 108,985
Interest expense 41,870 35,628 39,383 48,082 59,322
- -------------------------------------------------------------------------------------------------------------------
Net interest income 56,029 56,396 56,274 53,688 49,663
Provision for possible loan losses 2,770 6,055 3,229 3,279 2,963
- -------------------------------------------------------------------------------------------------------------------
Net interest income after provision
for possible loan losses 53,259 50,341 53,045 50,409 46,700
Other income 11,098 10,750 10,095 9,861 9,167
Other expenses 38,988 39,614 38,711 37,276 36,225
- -------------------------------------------------------------------------------------------------------------------
Income before income taxes and effect of
prior years' postretirement benefits 25,369 21,477 24,429 22,994 19,642
Provision for income taxes 7,180 5,780 6,587 6,523 5,239
- -------------------------------------------------------------------------------------------------------------------
Income before effect of prior years'
postretirement benefits 18,189 15,697 17,842 16,471 14,403
Effect of prior years' postretirement
benefits - net of tax effect --- --- --- (592) ---
- -------------------------------------------------------------------------------------------------------------------
Net Income $ 18,189 $ 15,697 $ 17,842 $ 15,879 $ 14,403
===================================================================================================================
Per Share: (2)
Income before effect of prior years'
postretirement benefits $ 2.13 $ 1.81 $ 2.04 $ 1.88 $ 1.64
Effect of prior years' postretirement
benefits - net of tax effect --- --- --- (.07) ---
- -------------------------------------------------------------------------------------------------------------------
Net Income $ 2.13 $ 1.81 $ 2.04 $ 1.81 $ 1.64
===================================================================================================================
</TABLE>
(1) See Note 1 of the Notes to Consolidated Financial Statements.
(2) Adjusted for two-for-one stock split which occurred during April 1993.
26
<PAGE> 20
EARNINGS SUMMARY
- ------------------------------------------------------------------------------
WesBanco's net income rose 15.9% to $18,189,000 for the year ended
December 31, 1995 as compared to $15,697,000 and $17,842,000 for the years
ended December 31, 1994 and 1993, respectively. The 1995 increase reflects
a reduction in both the provision for loan losses and non-interest expense.
The decrease in 1994 net income was primarily due to an increase of $2,826,000
in the provision for loan losses relating to a writedown on a commercial loan.
Profitability measures improved with return on assets (ROA) increasing to 1.35%
from 1.17% in 1994 and return on equity (ROE) increasing to 11.12% from 9.99%
in 1994. For 1993, ROA and ROE were 1.34% and 11.70%, respectively.
The following table presents a comparative average balance sheet and
interest rate analysis.
AVERAGE BALANCE SHEET AND NET INTEREST ANALYSIS
- ------------------------------------------------------------------------------
(dollars in thousands)
<TABLE>
<CAPTION>
For the years ended December 31,
---------------------------------------------------------------------------------------
1995 1994 1993
----------------------------- ------------------------- ---------------------------
Average Average Average Average Average Average
Volume Interest Rate Volume Interest Rate Volume Interest Rate
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans $797,692 $71,399 8.95% $739,739 $62,626 8.47% $717,048 $63,716 8.89%
Investment securities:
Taxable 325,808 18,702 5.75 376,566 21,761 5.78 393,576 24,450 6.21
Non-taxable 121,093 6,655 5.50 125,027 6,894 5.51 112,314 6,644 5.92
- ------------------------------------------------------------------------------------------------------------------------
Total investment securities 446,901 25,357 5.68 501,593 28,655 5.71 505,890 31,094 6.15
Federal funds sold 19,353 1,143 5.90 17,677 743 4.20 26,741 847 3.17
- ------------------------------------------------------------------------------------------------------------------------
Total earning assets $1,263,946 $97,899 7.75% $1,259,009 $92,024 7.31% $1,249,679 $95,657 7.65%
- ------------------------------------------------------------------------------------------------------------------------
Cash and due from banks $ 40,825 $ 43,447 $ 41,700
Other assets 42,243 37,385 42,232
- ------------------------------------------------------------------------------------------------------------------------
Total Assets $1,347,014 $1,339,841 $1,333,611
========================================================================================================================
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY
Interest bearing demand $ 253,040 $ 7,070 2.79% $ 270,902 $ 7,357 2.72% $ 269,256 $ 8,172 3.03%
Savings deposits 293,103 8,127 2.77 320,789 8,584 2.68 310,482 9,917 3.19
Certificates of deposit 434,391 23,505 5.41 395,807 17,730 4.48 409,778 19,346 4.72
- ------------------------------------------------------------------------------------------------------------------------
Total interest bearing deposits 980,534 38,702 3.95 987,498 33,671 3.41 989,516 37,435 3.78
Federal funds purchased and
repurchase agreements 55,272 2,958 5.35 53,189 1,812 3.41 54,426 1,783 3.28
Other borrowings 4,825 210 4.35 4,706 145 3.08 7,394 165 2.23
- -------------------------------------------------------------------------------------------------------------------------
Total interest
bearing liabilities $1,040,631 $41,870 4.02% $1,045,393 $35,628 3.40% $1,051,336 $39,383 3.74%
- -------------------------------------------------------------------------------------------------------------------------
Noninterest bearing demand $ 128,380 $ 127,695 $ 115,599
Other liabilities 12,698 7,829 12,365
Redeemable Preferred Stock 1,670 1,851 1,827
Shareholders' Equity 163,635 157,073 152,484
- -------------------------------------------------------------------------------------------------------------------------
Total Liabilities, Redeemable
Preferred Stock &
Shareholders' Equity $1,347,014 $1,339,841 $1,333,611
=========================================================================================================================
Net yield on earning assets $56,029 4.43% $56,396 4.48% $56,274 4.50%
=========================================================================================================================
Taxable equivalent net yield
on earning assets $59,612 4.72% $59,995 4.77% $59,743 4.78%
=========================================================================================================================
</TABLE>
Nonaccrual loans were included in the average volume for the entire year.
Loan fees included in interest on loans are not material. Average yields
on investment securities available for sale have been calculated based on
amortized cost. Taxable equivalent basis is calculated on non-taxable
securities using a tax rate of 35% for 1995, 34.3% for 1994 and 1993.
27
<PAGE> 21
NET INTEREST INCOME
- -----------------------------------------------------------------------------
In 1995, net interest income was $56,029,000, a decrease of $367,000 or
.06% from 1994, following a slight increase in 1994 over 1993. The 1995
decrease resulted from a lower net yield on earning assets. The net yield
declined to 4.4% for 1995, from 4.5% for 1994 and 1993.
Interest income growth for 1995 was caused primarily by an increase in
loan balances coupled with higher loan yields and changes in the mix of
assets. The average yield on earning assets increased 0.5% to 7.8% in 1995.
Loan yields increased 0.5% to 9.0%, while investment yields decreased slightly.
The 1995 nationwide bank base lending rate averaged 8.6%, up from 7% in 1994
and 6% in 1993.
Interest expense increased in 1995 due to rising interest rates in late
1994 and early 1995, customers' preference for certificates of deposits, and
pricing pressure to compete for funds in the marketplace. These factors led
to an increase in the average rate paid on interest bearing liabilities of 0.6%
to 4.0% during 1995.
The decline in interest rates during 1993 and early 1994 caused the
average earning asset yield to decrease to 7.3% during 1994 from 7.7% for
1993. During the same period the average rate paid on interest bearing
liabilities decreased to 3.4% in 1994 from 3.7% in 1993.
INVESTMENTS
- ------------------------------------------------------------------------------
Taxable investment securities averaged $325,808,000 during 1995, a
decrease of 14% over 1994. Non-taxable securities decreased 3% to
$121,093,000 over the same period. During 1994, average taxable securities
decreased $17,010,000 or 4% over 1993, while average non-taxable securities
increased $12,713,000 or 11% over the same period. For 1995 and 1994, the
decreases in total average investment securities were required to fund loan
growth.
WesBanco's available for sale portfolio at fair market value was
$172,137,000 or 41% of total investment securities as of December 31, 1995,
compared to $202,705,000 or 42% of investment securities for the same period
in 1994. The general decline in interest rates during 1995 led to an increase
in the market value of the available for sale portfolio. The market value
adjustment as of December 31, 1995 reflected an unrealized gain, net of tax of
$849,000, recorded as an adjustment to shareholders' equity. As of December
31, 1994, securities available for sale had an unrealized loss, net of tax, of
$4,482,000. These market value adjustments represent temporary market value
fluctuations which depend upon general changes in market rates. WesBanco can
adjust the volatility of the market value adjustment by managing both the
volume of securities classified as available for sale and average maturities.
If securities are held to their maturity dates, no net gain or loss would be
realized. At December 31, 1995, the available for sale portfolio had an
average yield of 5.7% and an average maturity of 3.1 years.
Held to maturity securities, at cost, totaled $251,016,000 or 59% of total
investment securities as of December 31, 1995, compared to $274,173,000 or 58%
for the same period in 1994. At December 31, 1995, the held to maturity
portfolio had an average yield of 5.5% and an average maturity of 2.8 years.
In accordance with the Financial Accounting Standards Board Special Report
allowing for a one-time transfer of securities, WesBanco reclassified
securities held by the Parent Company with a market value of $5,667,000 from
the held to maturity category to available for sale during the fourth quarter
of 1995.
During 1995 and 1994, as loan demand exceeded deposit growth, matured,
called or sold investment securities represented a primary source of
liquidity. Investment securities with a total carrying value of $106,960,000
either matured or were called during 1995 as compared to $98,939,000 during
1994. Investment securities of $59,291,000 and $67,002,000 were sold during
1995 and 1994, respectively. The average maturity of total investment
securities at December 31, 1995 was 2.9 years as compared to 3.1 years and
3.6 years as of December 31, 1994 and 1993, respectively. During 1996,
securities totaling $122,831,000 or 29% of total securities are expected to
mature, providing for potential liquidity needs.
Investment income declined by $3,298,000 during 1995 after declining by
$2,439,000 during 1994. The 1995 decline was primarily due to a decrease in
average investment balances of $54,692,000 or 11%. The average yield on
taxable securities, excluding the effects of the market value adjustment on
available for sale securities, remained stable at 5.8% for 1995 and 1994, down
from 6.2% for 1993. The average yield on non-taxable securities, not adjusted
for tax equivalency, was 5.5% for 1995 and 1994, down from 5.9% for 1993.
Net realized securities gains totaled $437,000 in 1995 compared to
$366,000 and $164,000 in 1994 and 1993, respectively. During 1995, net gains
of $126,000 were realized through a decision to divest of an equity position
which no longer had a strategic value to the Corporation. Gains and losses
on securities are dependent upon the changing bond market conditions and the
composition of the securities.
28
<PAGE> 22
LOANS
- ------------------------------------------------------------------------------
At December 31, 1995, loans outstanding were $850,568,000, representing
an increase of 9.5% from December 31, 1994. This follows a 3.9% increase in
loans for the corresponding period in 1994. The strong growth can be
attributed to mortgage and consumer loans, which had individual portfolio
increases of 9.5% and 15.1%, respectively. The increase in mortgage loans
was largely due to refinancing activity caused by a declining interest rate
environment during 1995. Consumer loans increased as a result of offering
attractive rates on automobile loans originated through dealers. However,
the increase was partially offset by the sale of student loans. During 1995
and 1994, the Corporation sold substantially all of its student loan portfolio,
which totaled approximately $9,000,000. Commercial loans increased 6.6% during
1995, after a decrease of 2% during 1994. As of December 31, 1995, commercial
loans comprised 20% of total loans outstanding, real estate secured loans
comprise 47.5%, and consumer-type loans comprise 32.5%. WesBanco's lending
limit to a single customer was $24,839,000 as of December 31, 1995.
Interest on loans increased $8,773,000 or 14% during 1995, after a
decrease of $1,090,000 during 1994. The 1995 increase was due to growth in
average loans of $57,953,000 or 7.8%, combined with an increase in the
average loan yield of 0.5% to 9.0%. Average loan yields for 1994 and 1993
were 8.5% and 8.9%, respectively. Rates offered on loan products generally
increased during the second half of 1994 into early 1995, causing an increase
in loan yields during 1995. The majority of commercial and mortgage loans
reprice monthly or annually based on changes in national indices such as prime
rate or the U.S. Treasury Bill rate.
On January 1, 1995, WesBanco adopted FAS No. 114 "Accounting by Creditors
for Impairment of a Loan." A loan is considered impaired when it is probable
that the lender will be unable to collect all principal and interest amounts
due according to the contractual terms of the loan agreement. At December 31,
1995 impaired loans included all nonperforming loans.
Loans classified as nonperforming declined to $7,291,000 or .9% of loans
outstanding as of December 31, 1995 as compared to $8,183,000 or 1.1% as of
December 31, 1994. The decline in 1995 was primarily due to the
reclassification of a nonaccrual commercial loan to other assets, where the
property is recorded at fair market value. Nonaccrual loans are generally
secured by collateral believed to have adequate market values to protect
against significant losses. The Corporation continues to monitor the
nonperforming assets to ensure against deterioration in collateral values.
Net charge-offs and the provision for possible loan losses in 1995
decreased primarily due to a 1994 writeoff of a commercial real estate loan
approximating $4,000,000. Net loan charge-offs were $2,340,000 in 1995 as
compared to $5,589,000 in 1994 and $2,016,000 in 1993. The provision for
possible loan losses decreased to $2,770,000 in 1995 from $6,055,000 and
$3,229,000 in 1994 and 1993, respectively.
The reserve for possible loan losses is considered adequate to provide
for future losses in the loan portfolio. In determining the adequacy of
the reserve for possible loan losses, the Corporation exceeds the minimum
guidelines as set forth by the Office of the Comptroller of the Currency.
Amounts charged to earnings were based on periodic management evaluations
of the loan portfolio, specific problem loans and other factors.
DEPOSITS
- ------------------------------------------------------------------------------
As of December 31, 1995 total deposits increased to $1,115,473,000 from
$1,109,219,000 as of December 31, 1994. The increase can be attributed to
fourth quarter deposit growth related to the introduction of a new retail
banking program called Good Neighbor Banking. The program offers a series of
pricing bonuses which vary according to the customer's service relationship.
Average deposits decreased $6,279,000 or .5% to $1,108,914 in 1995, after
an increase of $10,078,000 or 1% between 1994 and 1993. The decrease in
average deposits during 1995 and the slight growth in 1994 can be attributed
to the competition for funds in the local market and consumers seeking
nonbank investment alternatives. Certificates of deposit increased $38,584,000
or 9.7% during 1995, reflecting a change in deposit mix as customers moved from
demand and savings products into certificates of deposit. As interest rates
rose during late 1994 and early 1995, customers were attracted to the
higher-yielding certificate of deposit products during 1995.
Interest expense on deposits increased $5,031,000 or 14.9% during 1995 as
compared to a decrease of $3,764,000 during 1994. The 1995 increase is
reflected in the average rate paid on interest bearing deposits which rose to
4.0% during 1995 as compared to 3.4% in 1994 and 3.8% in 1993, due primarily
to the rising interest rate environment during late 1994, coupled with a shift
in deposit mix from demand and savings balances to the higher-yielding
certificates of deposit. During 1995, certificates of deposit comprised 39% of
average deposits, up from 35% in 1994.
29
<PAGE> 23
CAPITAL ADEQUACY
- ------------------------------------------------------------------------------
On December 31, 1995 shareholders' equity totaled $170,040,000, an
increase of $13,410,000 from 1994. The increase can be attributed to
earnings growth in 1995 combined with a change in the market value adjustment
on investments available for sale of $5,331,000, from a net unrealized loss
of $4,482,000 at December 31, 1994 to a net unrealized gain of $849,000 at
December 31, 1995.
During the third quarter 1995 the Corporation completed a $7,000,000
common stock repurchase plan that began in April 1994, and announced the start
of a $10,000,000 common stock repurchase plan. The plan, which may be
discontinued or suspended at any time, will provide shares for general
corporate purposes. At December 31, 1995, approximately $971,882 of the stock
repurchase plan had been utilized.
During the fourth quarter 1995, WesBanco redeemed its Series A 8%
Cumulative Preferred Stock. The holders of 9,723 shares elected to convert
their preferred shares into common shares, resulting in the issuance of
111,111 shares previously held in treasury.
Effective April 1, 1995 the quarterly per share dividend rate was
increased to $.23 from $.22 and on October 1, 1995 was increased to $.25.
The dividend payout ratio for 1995 was 45%, down slightly from 47% in 1994.
The decrease in the ratio was due to the increased level of earnings during
1995.
WesBanco is subject to risk-based capital guidelines that measure capital
relative to risk-adjusted assets and off-balance sheet financial instruments.
The Corporation's Tier 1, total risk-based capital and leverage ratios are well
above the required minimum levels of 4%, 8%, and 3%, respectively. At
December 31, 1995, all of WesBanco's affiliate banks exceeded the minimum
regulatory levels. Capital adequacy ratios are summarized as follows:
<TABLE>
<CAPTION>
As of December 31,
---------------------
Ratio 1995 1994
- ------------------------------------------------------------------------------
<S> <C> <C>
Primary capital (1) 13.2% 12.4%
Tier 1 capital (2) 18.7% 19.9%
Total risk-based capital (3) 20.0% 21.1%
Leverage (4) 12.4% 11.9%
- ------------------------------------------------------------------------------
</TABLE>
(1) Equity plus the reserve for loan losses, including the market value
adjustment on investments available for sale; as a percentage of total assets
plus the reserve for loan losses.
(2) Equity, excluding the market value adjustment on investments available
for sale, less certain intangibles; as a percentage of risk-adjusted assets.
(3) Tier 1 capital plus qualifying reserve for loan losses; as a percentage
of risk-adjusted assets.
(4) Tier 1 capital; as a percentage of average assets.
INTEREST RATE MANAGEMENT AND LIQUIDITY
- -------------------------------------------------------------------------------
Interest rate management measures the sensitivity of net interest earnings
to changes in the level of interest rates. As interest rates change in the
market, rates earned on interest earning assets and rates paid on interest-
bearing liabilities do not necessarily move concurrently. Differing rate
sensitivities may arise because fixed rate assets and liabilities may not have
the same maturities or because variable rate assets and liabilities differ in
the timing of rate changes.
The affiliate banks review their interest rate sensitivity on a periodic
basis. The analysis presented below classifies interest earning assets and
interest bearing liabilities into maturity categories and measures the
differences between maturing assets and liabilities in each category (interest
sensitivity gap). At December 31, 1995, the Corporation was in a liability
sensitive position as summarized in the table below (in thousands):
<TABLE>
<CAPTION>
Under Three Six Nine Over
Three to Six to Nine Months to One
Months Months Months One Year Year Total
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Due from banks/interest bearing --- --- --- $ 104 $ 197 $ 301
Loans $189,469 $ 50,329 $ 58,941 56,175 495,654 850,568
Investment securities(1) 34,968 30,422 17,549 39,892 298,930 421,761
Federal funds sold 14,230 --- --- --- --- 14,230
- -------------------------------------------------------------------------------------------------------
Total interest earning assets 238,667 80,751 76,490 96,171 794,781 1,286,860
- -------------------------------------------------------------------------------------------------------
LIABILITIES
Savings and NOW accounts 451,119 --- --- --- --- 451,119
All other interest bearing deposits 184,375 66,920 34,448 29,967 221,476 537,186
Short term and other borrowings 60,498 5,835 2,228 2,948 350 71,859
- -------------------------------------------------------------------------------------------------------
Total interest bearing liabilities 695,992 72,755 36,676 32,915 221,826 1,060,164
- -------------------------------------------------------------------------------------------------------
Interest sensitivity gap $(457,325) $ 7,996 $ 39,814 $ 63,256 $572,955 $ 226,696
=======================================================================================================
Cumulative interest sensitivity gap $(457,325) $(449,329) $(409,515) $(346,259) $226,696
=======================================================================================================
</TABLE>
(1) Securities are categorized above by expected maturity at amortized cost.
30
<PAGE> 24
INTEREST RATE MANAGEMENT AND LIQUIDITY (CONTINUED)
- -------------------------------------------------------------------------------
The changing interest rate environment can substantially impact the
Corporation's net interest income and profitability. The Asset/Liability
Committee believes the Corporation's interest sensitivity position provides
for a changing interest rate environment. During the next twelve months, the
Corporation's net interest sensitivity position is $(457,325,000), $7,996,000,
$39,814,000 and $63,256,000 during the periods under three months, three to
six months, six to nine months and nine months to one year, respectively. The
liability sensitive position in the under three month time period is caused by
savings and NOW deposits. Interest rates on these deposit instruments are
subject to periodic adjustment at management's discretion. Rates on savings
and NOW deposits ranged from 2.0% to 3.0% during 1995 as compared to 2.5% to
3.0% during 1994.
The Corporation's short-term liability sensitive position would suggest
exposure of the net interest margin to changing interest rates. An increase
in interest rates may cause a decline in the net interest margin while
decreasing interest rates may have the opposite effect. The Corporation may
reduce its short-term liability sensitive position making its net interest
margin less vulnerable to rising interest rates by shortening asset maturities,
primarily through federal funds and investment maturities. In addition,
management may emphasize attracting longer-term deposits by not increasing
the rates paid on savings and NOW accounts, while increasing rates on term
certificates of deposit.
The Corporation manages its liquidity position to ensure that sufficient
funds are available to meet customer needs for borrowing and deposit
withdrawals. The Corporation's primary source of liquidity is its strong
core deposit base. The growth in deposits is somewhat dependent upon interest
rates of competitive financial instruments. Short-term liquidity is maintained
through the use of federal funds sold, which represents one day investments
and cash balances. As of December 31, 1995, federal funds sold and cash
balances were $63,539,000 or 4.6% of total assets as compared to $65,310,000
or 4.8% of total assets as of December 31, 1994. Additional short-term
liquidity is maintained through investments with expected maturities of less
than one year which, during 1996, approximate $122,831,000 or 9.0% of total
assets. During 1995 investment maturities and calls of $106,960,000 became
available for reinvestment.
As of December 31, 1995 the Corporation had outstanding commitments to
extend credit in the ordinary course of business approximating $63,307,000.
On a historical basis only a small portion of these commitments result in
expended funds.
The Corporation has commitments for planned additions to fixed assets
of approximately $2,000,000 during 1996, which includes the construction of a
new branch facility, new integrated banking software, and the phase-in of a
local and wide area networking system.
OTHER INCOME
- ------------------------------------------------------------------------------
Other income, excluding securities transactions, increased $277,000 or
2.7% over 1994, due primarily to an increase in trust fee revenue. Trust
fee revenue was $4,716,000 for 1995, an increase of $291,000 or 6.6% over
1994. Trust fee revenue increased $265,000 or 6.4% between 1994 and 1993.
This steady increase in trust fees can be attributed to the increased number
of accounts under administration and increased market values. The market
value of trust assets at December 31, 1995 approximated $1,283,218,000 as
compared to $1,113,416,000 at December 31, 1994. Service charges and other
income totaled $4,906,000 for 1995, a decrease of $131,000 over 1994.
Contributing to the decrease were fee discounts associated with Good Neighbor
Banking. Service charges and other income increased $224,000 between 1994 and
1993 due to increases in the fees associated with deposit accounts.
OTHER EXPENSES
- ------------------------------------------------------------------------------
Other expenses decreased $626,000 or 1.6% in 1995 to $38,988,000. The
decline from last year was primarily due to a reduction in the FDIC insurance
rate. During 1994 other expenses increased $903,000 or 2.3% from 1993,
primarily due to increased personnel costs. Increases in health insurance,
pension costs, and the recognition of employment contracts for two First
Fidelity executive officers contributed to the increase during 1994.
Salaries and benefits for 1995 remained at approximately the same level
as 1994, decreasing $90,000 or .4% as compared to an increase of $1,239,000
or 6.1% in 1994. During 1995, the number of full-time equivalent employees
decreased to 755 from 775, causing a 2.4% reduction in salary expenses.
Internal bank consolidations have reduced staffing levels in different areas
of the Corporation. The reduction in salary expenses was partially offset by
an
31
<PAGE> 25
OTHER EXPENSES (CONTINUED)
- ------------------------------------------------------------------------------
increase in benefits, primarily in employer expenses for health care and
retirement benefits.
The Corporation expects employee benefits to continue to rise in 1996.
In addition to anticipated increases in health insurance costs, effective
January 1, 1996 WesBanco expanded its existing ESOP to include 401(k)
provisions. The Corporation will make matching contributions on behalf of each
participant, up to a maximum of 1.5% of the employee's pay, subject to
regulatory limitations.
Occupancy and equipment expenses increased approximately 2.5% in 1995 and
1994. The increases can be attributed to the construction of a new branch
facility in Bridgeport, WV and technological advancements to enhance customer
service through the phase-in of a local area network and loan platform
automation.
Other operating expenses decreased $644,000 or 4.7%, after decreasing
$228,000 or 1.7% during 1994. The 1995 decrease was primarily due to a
reduction in FDIC insurance expense, partially offset by increases in
marketing expenses associated with the introduction of the Good Neighbor
Banking Program. In addition, the Corporation has experienced improved
operating efficiencies through internal consolidations of affiliate banks.
Internal consolidations reduced the number of affiliate banks to six in 1995
from thirteen in early 1994. Affiliate bank consolidations are planned
throughout 1996.
INCOME TAXES
- ------------------------------------------------------------------------------
Federal income tax expense increased $1,132,000 to $6,072,000 during 1995,
after decreasing $567,000 to $4,940,000 during 1994. In 1995, the tax expense
increased due to increased pretax earnings. The decrease in tax expense for
1994 was affected primarily by the decrease in pretax earnings and the level
of nontaxable income.
The effective tax rate for the Corporation was 28% for 1995, 27% for
1994 and 1993. The changes in the effective tax rate are representative of
the change in the level of taxable income and to a lesser extent the changing
state tax rates. The alternative minimum tax will affect WesBanco only if a
significant amount of non-taxable income exists when compared to taxable
income.
During 1993, Congress enacted the Omnibus Budget Reconciliation Act of
1993 which included increasing certain corporate income tax rates retroactive
to January 1, 1993. The change in the corporate tax rate was increased to 35%
from 34% for corporations with income over $15,000,000.
The State of West Virginia has a corporate net income tax based upon
federal taxable income, adjusted for certain items not subject to state
taxation. The state tax rate for 1995 was 9.0%. State income tax included
in the provision for income taxes was $1,108,000 for 1995 as compared to
$840,000 and $1,080,000 for 1994 and 1993, respectively. The State of Ohio
does not have a corporate income tax, but rather, businesses are subject to
an Ohio corporate franchise tax which is included in other operating expenses.
ACQUISITIONS
- ------------------------------------------------------------------------------
During February 1994, the Corporation acquired all of the outstanding
stock of First Fidelity Bancorp, Inc. (Fidelity). The acquisition was
accounted for as a pooling-of-interests which requires that all amounts
included in the proforma financial statements be restated as if the acquisition
had occurred on the first day of each year presented. Fidelity had net income
of $3,179,000 for the year ended December 31, 1993. On a proforma basis, the
acquisition of Fidelity caused dilution in earnings per share of $.18 for the
year ended December 31, 1993. Book value was diluted by $.87 for 1993.
On February 9, 1996, WesBanco, Inc. announced the signing of a definitive
Agreement and Plan of Merger providing for the merger of the Bank of Weirton
with WesBanco Bank Wheeling, an affiliate of WesBanco, Inc. The transaction,
which is subject to, among other things, approval by the appropriate regulatory
authorities and the stockholders of Bank of Weirton, is expected to be
completed during the third quarter of 1996. See Note 19 in the Notes to
Consolidated Financial Statements for additional information associated with
the merger agreement.
32
<PAGE> 26
MARKET OF COMMON STOCK AND RELATED SHAREHOLDER MATTERS
- ------------------------------------------------------------------------------
WesBanco's common stock is quoted on The Nasdaq Stock Market (Nasdaq),
with a trading symbol of WSBC. As reported by Nasdaq, the price information
reflects high and low sales prices.
The approximate number of holders of WesBanco's $2.0833 par value common
stock as of December 31, 1995 was 3,875.
Effective with the April 1, 1996 dividend, the quarterly dividend will be
increased from $ .25 to $.26 per share. The new dividend amount represents an
annualized dividend of $1.04 per share.
The following represents reported high and low trading prices and
dividends declared during the respective quarter:
<TABLE>
<CAPTION>
Dividend
High Low Declared
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
1995
4th quarter $30.00 $26.75 $.25
3rd quarter 29.50 25.75 .25
2nd quarter 26.50 23.25 .23
1st quarter 25.75 22.75 .23
1994
4th quarter $29.25 $23.25 $.22
3rd quarter 29.00 26.00 .22
2nd quarter 28.25 25.75 .21
1st quarter 29.50 27.50 .21
</TABLE>
OTHER MATTERS
- ------------------------------------------------------------------------------
Certain information in "Management's Discussion and Analysis" and other
statements contained in this report which are not historical facts may be
forward-looking statements that involve risks and uncertainties. Such
statements are subject to important factors that could cause actual results
to differ materially from those contemplated by such statements, including
without limitation, the effect of changing regional and national economic
conditions; changes in interest rates; credit risks of commercial, real estate,
consumer and other lending activities; changes in federal and state
regulations; the presence in the Company's market area of competitors with
greater financial resources than the Company; or other unanticipated
external developments materially impacting the Company's operational and
financial performance.
33
<PAGE> 27
WESBANCO, INC. OFFICERS
- -----------------------------------------------------------------------------
OFFICERS
James C. Gardill
Chairman of the Board [PHOTO] Executive Management
Seated Left to Right: Edward M.
Robert H. Martin George, President and CEO;
Vice Chairman James C. Gardill, Chairman and
Robert H. Martin, Vice Chairman.
Edward M. George Standing from the Left:
President & Chief Executive Dennis P. Yaeger, Executive
Officer Vice President and COO and
Paul M. Limbert, Executive Vice
Paul M. Limbert President and CFO.
Executive Vice President &
Chief Financial Officer
Dennis P. Yaeger
Executive Vice President &
Chief Operating Officer
Robert V. Aiken Seated From the Left: Shirley A. [PHOTO]
Senior Vice President - Bucan, Secretary and John W.
Loan Administration Moore,Jr.,Senior Vice
President-Human Resources.
John W. Moore, Jr. Standing From the Left:
Senior Vice President - Jerome B. Schmitt, Senior Vice
Human Resources President-Investments; Robert
V. Aiken, Senior Vice President-
Jerome B. Schmitt Loan Administration; and
Senior Vice President - Gregory W. Adkins, Auditor.
Investments
Larry L. Dawson
Vice President
Jerry A. Halverson Standing From the Left: Larry L. [PHOTO]
Vice President Dawson, Vice President; Jerry
A. Halverson, Vice President
Albert A. Peitz, Jr. and Albert A. Pietz, Jr. Vice
Vice President President.
Edward G. Sloane, Sr.
Vice President - Data Processing
Gregory Wm. Adkins
Auditor
Shirley A. Bucan
Secretary
Thomas B. McGaughy [PHOTO] Standing From the Left:
Assistant Secretary Peter W. Jaworski, Senior Loan
Review Officer; Mary Ruth
Peter W. Jaworski Cilles, Operations Officer and
Senior Loan Review Officer Matthew W. Pribus, Operations
Officer.
James C. Porter
Compliance Officer Not pictured:
Edward G. Sloane, Sr. Vice
Mary Ruth Cilles President-Data Processing;
Operations Officer Thomas B. McGaughy, Assistant
Secretary and James C. Porter,
Matthew W. Pribus Compliance Officer.
Operations Officer
34
<PAGE> 28
WESBANCO, INC. DIRECTORS
- -----------------------------------------------------------------------------
Frank K. Abruzzino
Attorney-at-Law
Steptoe & Johnson
James E. Altmeyer
President
Altmeyer Funeral Homes, Inc.
Earl C. Atkins
President, City Neon, Inc.
Gilbert S. Bachmann*
Partner, Bachmann, Hess,
Bachmann & Garden
Attorneys-at-Law
Charles J. Bradfield*
President & CEO
WesBanco Barnesville
Ray A. Byrd
Partner, Schrader, Byrd,
Companion & Gurley
Attorneys-at-Law
H. Thomas Corrie
President
Atlantic Development Corp., Inc.
Christopher V. Criss*
President & CEO
Atlas Towing Company
Stephen F. Decker*
President & CEO
WesBanco Kingwood
James D. Entress, D.M.D.
Oral and Maxillo-Facial
Surgeon
James C. Gardill*
Chairman of the Board
WesBanco, Inc.
Partner, Phillips, Gardill,
Kaiser & Altmeyer
Attorneys-at-Law
Edward M. George*
President & CEO
WesBanco, Inc.
Roland L. Hobbs*
Vice Chairman of the Board
Wheeling Park Commission
John W. Kepner
Mortician, President
Kepner Funeral Homes
Frank R. Kerekes*
President & CEO
WesBanco Fairmont
John D. Kirk
Retired, Former Owner
Kirk's Furniture
Walter W. Knauss, Jr.
Former Vice President &
Secretary
WesBanco, Inc.
Robert H. Martin*
Vice Chairman, WesBanco,
Inc.
President
Eastland Enterprises, Inc.
Eric Nelson
President, Nelson Enterprises
Melvin C. Snyder, Jr.
Attorney
Joan C. Stamp
Director, American Symphony
Orchestra League
Carter W. Strauss*
President, Strauss Industries, Inc.
Thomas L. Thomas, M.D.*
Physician
James L. Wareham
Chairman of the Board,
President & CEO
Wheeling-Pittsburgh
Steel Corporation
President, WHX Corporation
John A. Welty
Secretary/Treasurer
Welty Buick Pontiac GMC
Truck Company, Inc.
William E. Witschey*
President
Witschey's Market, Inc.
DIRECTOR EMERITUS
John J. Paull
Chairman and Treasurer
Eagle Manufacturing Company
*Member Executive Committee
AFFILIATE AND ADVISORY BOARDS
- -----------------------------------------------------------------------------
WESBANCO WHEELING
James E. Altmeyer
Ray A. Byrd
H. Thomas Corrie
D. Duane Cummins
James C. Gardill
Edward M. George
Thomas M. Hazlett
Roland L. Hobbs
John M. Karras
John W. Kepner
Walter W. Knauss, Jr.
Paul M. Limbert
Rizal V. Pangilinan
C. Jack Savage
H. Mendel Spears
Joan C. Stamp
Carter W. Strauss
Thomas L. Thomas
John A. Welty
Gary E. West
William E. Witschey
John C. Wright
John E. Wright, III
WESBANCO
BARNESVILLE
Charles J. Bradfield
William E. Chaney
John H. Cheffy
Frederick C. Claugus
William R. Finnical
John D. Kirk
Dennis P. Yaeger
WESBANCO SOUTH HILLS
Thomas A. Bradford
Gregory C. Briscoe
Jason K. Conley
Thomas F. Cox, Jr.
Larry L. Dawson
William Hamady
Thomas L. Jones
John L. McClaugherty
Rodger D. Monk
Eric Nelson
C. Alan Otey
Richard A. Rubin
A. Stephen Thomas
Allen D. Thompson
Lisa D. Tyree
Bernard W. Whittington
WESBANCO
PARKERSBURG
Christopher V. Criss
John S. Criss
Patrick M. Criss
Jerry A. Halverson
Jack B. Kincaid
Charles E. McCarty
Edward M. Nelson, III
Robert E. Newberry
James H. Roberts
R. Bruce White
WESBANCO FAIRMONT
Frank K. Abruzzino
Jackson L. Anderson
Earl C. Atkins
John F. Brennan
J. David Carlot
Clair Chenoweth
William R. Creighton
Stephen F. Decker
Joseph F. Ford, III
Robert D. Hess
Frank R. Kerekes
C. David Laughlin
George A. Markusic
Robert H. Martin
Dean C. Ramsey
Patrick L. Schulte
Bernard W. Simons
WESBANCO KINGWOOD
William G. Boyle
Stephen F. Decker
E. D. Grande
Melvin C. Snyder, Jr.
Franklin C. Street
James F. Wright
WESBANCO
ADVISORY BOARDS
NEW MARTINSVILLE-
SISTERSVILLE
J. Wells Eakin
Robert E. Eakin
John P. Eckels
R. O'Neal Hanlin
John J. Mensore
James B. Phillips
F. M. Dean Rohrig
Robert D. Wable
Edwin C. Weigle
William E. Witschey
John C. Wright
FOLLANSBEE-WELLSBURG
Charles D. Bell
Frank L. Bush
Fred T. Chambers
Leo P. Cocco
Robert A. Jack
John J. Paull
Stephen B. Paull
Hazlett M. Rodgers
Elmer H. Vincent
John E. Wright, III
ELIZABETH
Noble G. Bush
Joseph T. Cain
Charles E. McCarty
James H. Roberts
Larry A. Roberts
G. Warren Sullivan
35
<PAGE> 29
WESBANCO, INC. BANKING SUBSIDIARIES
- -----------------------------------------------------------------------------
WESBANCO WHEELING
Paul M. Limbert
President and CEO
1 Bank Plaza
Wheeling, WV 26003
(304) 234-9000
WESBANCO SOUTH HILLS
Larry L. Dawson
President and CEO
852 Oakwood Road
Charleston, WV 25329
(304) 345-0670
WESBANCO PARKERSBURG
Jerry A. Halverson
President and CEO
Gihon Village Shopping Center
Parkersburg, WV 26101
(304) 485-7331
WESBANCO KINGWOOD
Stephen F. Decker
President and CEO
106 West Main Street
Kingwood, WV 26537
(304) 329-0585
WESBANCO BARNESVILLE
Charles J. Bradfield
President and CEO
101 E. Main Street
Barnesville, OH 43713
(614) 425-1927
WESBANCO FAIRMONT
Frank R. Kerekes
President and CEO
301 Adams Street
Fairmont, WV 26554
(304) 363-1300
STOCKHOLDER INFORMATION
- ------------------------------------------------------------------------------
STOCK TRADING
The Nasdaq Stock Market
STOCK REGISTRAR AND
TRANSFER AGENT
WesBanco Wheeling
1 Bank Plaza
Wheeling, WV 26003
CORPORATE
HEADQUARTERS
1 Bank Plaza
Wheeling, WV 26003
ANNUAL MEETING
The Annual Meeting of Shareholders
will be held Wednesday, April 17,
1996 at 4:00 p.m. at the McLure
House Hotel, 1200 Market Street,
Wheeling, WV.
WesBanco, Inc. is an Equal Opportunity
Employer
AUTOMATIC DIVIDEND REINVESTMENT PLAN
Shareholders may elect to reinvest their dividends in additional shares
of WesBanco, Inc. common stock through the Corporation's Dividend
Reinvestment Plan. Shareholders also may invest optional cash payments of
up to $5,000 per quarter in our common stock at market price. To arrange
automatic purchase of shares with quarterly dividend proceeds, please
contact Mrs. Rhonda Revels, Trust Officer, 1 Bank Plaza, Wheeling, WV 26003,
Telephone (304) 234-9411.
DIRECT DEPOSIT
If you have a deposit relationshp at any WesBanco Bank, cash dividends can be
deposited directly to your bank account. Dividends will be deposited on the
date the dividend is payable, and you will receive a confirmation of payment
when the dividend is deposited to your account.
NOTICE OF FORM 10-K
Upon written request of any shareholder of record on December 31, 1995, the
Corporation will provide, without charge, a Form 10-K, including financial
statements and schedules, as required to be filed with the Securities and
Exchange Commission. To obtain a copy of Form 10-K, contact Shirley A.
Bucan, Secretary, WesBanco, Inc., 1 Bank Plaza, Wheeling, WV 26003.
36
<PAGE> 30
The Banks of [WESBANCO LOGO]
WesBanco
COMMUNITIES SERVED
- -----------------------------------------------------------------------------
WEST VIRGINIA
Wheeling
Follansbee
Hooverson Heights
Wellsburg
Centre Wheeling
Woodsdale
Elm Grove
New Martinsville
Steelton
Pine Grove
Sistersville
Parkersburg
Mineral Wells
Elizabeth
Sissonville
South Hills
Kingwood
Masontown
Bruceton Mills
Morgantown
Westover
Bridgeport
Shinnston
Nutter Fort
Fairmont
OHIO
Barnesville
Beallsville
Bethesda
Woodsfield
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 49,008
<INT-BEARING-DEPOSITS> 301
<FED-FUNDS-SOLD> 14,230
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 172,137
<INVESTMENTS-CARRYING> 251,016
<INVESTMENTS-MARKET> 253,831
<LOANS> 850,568
<ALLOWANCE> 12,747
<TOTAL-ASSETS> 1,371,793
<DEPOSITS> 1,115,473
<SHORT-TERM> 71,859
<LIABILITIES-OTHER> 13,644
<LONG-TERM> 777
0
0
<COMMON> 18,087
<OTHER-SE> 151,953
<TOTAL-LIABILITIES-AND-EQUITY> 1,371,793
<INTEREST-LOAN> 71,399
<INTEREST-INVEST> 25,357
<INTEREST-OTHER> 1,143
<INTEREST-TOTAL> 97,899
<INTEREST-DEPOSIT> 38,702
<INTEREST-EXPENSE> 41,870
<INTEREST-INCOME-NET> 56,029
<LOAN-LOSSES> 2,770
<SECURITIES-GAINS> 437
<EXPENSE-OTHER> 38,988
<INCOME-PRETAX> 25,369
<INCOME-PRE-EXTRAORDINARY> 25,369
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,189
<EPS-PRIMARY> 2.13
<EPS-DILUTED> 2.12
<YIELD-ACTUAL> 4.43
<LOANS-NON> 5,199
<LOANS-PAST> 3,006
<LOANS-TROUBLED> 2,092
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 12,317
<CHARGE-OFFS> 2,918
<RECOVERIES> 578
<ALLOWANCE-CLOSE> 12,747
<ALLOWANCE-DOMESTIC> 12,747
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 7,041
</TABLE>
